Limited Liability Company LLC

A **Limited Liability Company (LLC)** is a hybrid US legal entity formed at the state level under each state's LLC act. Members enjoy limited personal liability for company debts while retaining substantial freedom over governance and profit allocation. By default the IRS treats a single-member LLC as a disregarded entity and a multi-member LLC as a partnership, but members can elect S-corp or C-corp tax treatment by filing Form 8832 or 2553.\n\nThere is no statutory minimum capital, no requirement for a board of directors, and no formal share structure. Internal rules live in an operating agreement, which can allocate profits, losses, voting power, and management rights flexibly. Most states allow either member-managed or manager-managed structures. Annual obligations are usually light, often just a state report and a franchise or annual fee.\n\nLLCs are popular with freelancers, real estate investors, small operating businesses, and holding vehicles. They are not generally suitable for venture capital fundraising because investors prefer C-corporation stock, and pass-through K-1s complicate institutional fund tax positions.

You will encounter the LLC when forming a US small business, holding rental properties, or structuring a single-owner consulting practice. It is also the default vehicle for non-US residents looking for a simple US presence with bank account and Stripe access. If you plan to raise venture capital or issue stock options, founders typically convert the LLC into a Delaware C-corporation before the priced round, since most VCs cannot invest in pass-through entities.