Definition of limited liability company
limited liability company (plural limited liability companies)
- (law) A type or form of for-profit incorporated company where ownership is divided into shares, and where the governing rules are set forth in a contract entered into by all of the initial shareholders.
This article is about a U.S.-specific business entity form. For limited liability companies in the United Kingdom, see limited company. For a general discussion of entities with limited liability, see corporation.
A limited liability company or a company with limited liability (abbreviated L.L.C. or LLC or W.L.L) in the law of the vast majority of United States jurisdictions is a legal form of business company that provides limited liability to its owners. Often incorrectly called a "limited liability corporation" (instead of company), it is a hybrid business entity having certain characteristics of both a corporation and a partnership or sole proprietorship (depending on how many owners there are). An LLC, although a business entity, is a type of unincorporated association and is not a corporation. The primary characteristic an LLC shares with a corporation is limited liability, and the primary characteristic it shares with a partnership is the availability of pass-through income taxation. It is often more flexible than a corporation and it is well-suited for companies with a single owner.
It is important to understand that limited liability does not imply owners are always fully protected from personal liabilities. Courts can and do pierce the corporate veil of LLCs when some type of fraud or misrepresentation is involved, or under certain situations where the owner uses the company as an "alter ego."
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