LLCs: an overview

What an LLC is

A limited liability company (LLC) is a business entity that separates your personal assets from your business. If the business is sued or runs up debts, your personal property — home, car, personal savings — is generally protected. Compared with corporations and partnerships, the LLC is a relatively modern structure, and it has become the default choice for many small businesses because it's flexible and straightforward to run.

Key benefits

• Liability protection. Members aren't usually personally responsible for business debts or lawsuits.
• Pass-through taxation. By default, profits and losses flow to the members' personal returns, avoiding corporate double taxation.
• Flexible management. An LLC can be run by its members or by appointed managers, with fewer formalities than a corporation.
• Credibility. “LLC” after your name signals a formal, established business.

LLC vs. DBA vs. corporation

A DBA is only a registered name — it creates no entity and no liability protection. An LLC is a legal entity that protects your assets. A corporation is a more formal entity suited to raising investment. Many owners form an LLC and then file a DBA under it to run a specific brand. For more on how these compare, see doing business as.

Check a business name