Limited liability company

A limited liability company (sometimes known as an "LLC") is a combination of a corporation and a partnership. Although it is treated as a partnership for purposes of the federal tax code, its owners (members) have limited liability. This means that the most that they can generally lose is their investment in the company. In contrast, sole owners and partners have personal liability for the debts of their businesses. They may have to use personal, nonbusiness assets to pay off a business debt or loss.