A limited liability company (LLC) is a type of business entity that provides its owners with limited liability protection. This means that the owners, known as members, are not personally responsible for the company's debts and liabilities. Instead, the company is responsible for its own debts and liabilities, and the members' personal assets are generally protected from creditors.
For example, let's say a company is an LLC and it takes out a loan to expand its business. If the company is unable to repay the loan, the creditors cannot go after the members' personal assets, such as their houses or cars, to collect the debt. Instead, the creditors can only go after the company's assets, such as its property or equipment.
LLCs are a popular business structure for small businesses, as they provide owners with the benefits of both a corporation and a partnership. Like a corporation, LLCs provide limited liability protection to their members. Like a partnership, LLCs offer flexibility in terms of management and profit distribution. Additionally, LLCs are typically easier and less expensive to set up and maintain than corporations.