What Does LLC Mean in a Corporation?
An LLC is a Limited Liability Company, a type of business structure that combines the limited liability of a corporation and the tax advantages of a partnership.
Other People Are Reading
-
Ownership
-
LLC owners are called members. For the purposes of the IRS there is no maximum for the number of members, and they may include individuals, corporations, foreign entities or other LLCs. Banks and insurance companies cannot be LLC members, and special rules may apply to foreign members. Different states may have their own restrictions, but most states permit single member LLCs, with the owner as the only member.
Classification
-
There is no special federal tax classification for LLCs. The entity can file as either a corporation, a partnership or a sole proprietorship. According to the IRS, an LLC not classified as a corporation can file Form 8832 to choose their business entity classification.
-
Taxation
-
LLC owners report income and loss for tax purposes the same way that sole proprietors and partners do. The LLC is not a separate taxable entity like a corporation.
Liability Protection
-
Like owners of corporations, the personal assets of LLC members are protected in the event of business debts or claims. If someone sues the company, the award can be no greater than the assets of the business; personal assets cannot be touched. This protection does not apply if there has been illegal or irresponsible behavior.
-
