Free US Law Dictionary

Limited Liability Company

A limited liability company (abbreviated by L.L.C. or LLC) in the law the vast majority of the United States is a legal form of business company offering limited liability to its owners. It is often incorrectly called a "limited liability corporation" (instead of company). It is a hybrid business entity having characterstics of both a corporation and a partnership. The primary corporate characteristic is limited liability while the primary partnership characteristic is pass-though income taxation. Under some circumstances, however, the members (the LLC version of shareholders or partners) may elect for the LLC to be taxed like a corporation (taxation of the entity's income prior to any dividends or distributions to the members and then taxation of the dividends or distributions once received as income by the members). Corporations, S-Corporations, Limited Liability Partnerships, Limited Partnerships, Limited Liability Limited Parnerships, and LLCs lie along a spectrum of flexibilty with LLCs being the most flexible, and thus preferrable, for many businesses.