LLC means limited liability company. It’s a business structure that helps separate the owners’ personal assets from the company’s debts and legal liabilities.

Quick Scoop

  • LLC = limited liability company.
  • Owners are usually called members.
  • It’s popular because it can offer liability protection and flexible tax treatment.
  • In simple terms, if the business has problems, owners’ personal money and property are generally better protected than in a sole proprietorship or general partnership.

What it means

An LLC is a legal business form filed with a state, not just a name tag after a company. It can have one owner or many owners, and it is often used by small businesses because it combines some benefits of a corporation with simpler setup and management.

Why people use it

  • Personal liability protection.
  • Flexible tax options, often with pass-through taxation.
  • Less formal than a corporation in many cases.

Example

If you start a graphic design business as an LLC and the business takes on debt, the LLC structure may help keep that debt tied to the business rather than to you personally.

TL;DR

An LLC is a common business structure that can protect owners personally and give tax flexibility.