In US law, corporations are organizations authorized to act as a legal entity. United States law also recognizes another legal status for a company, called a ‘limited liability corporation,’ or LLC for short. LLCs are not separate legal entities like regular corporations, but they do provide some legal protections for owners.
LLCs can be insured separately from owners, and they also limit the personal liability of owners. If someone sues an LLC company, their suit is against the company, not the company owners. Owner risk from the suit is commonly limited to the value of their investment in the company – with some exemptions and conditions.
Unlike corporations, LLCs are not taxed on their own. LLCs are ‘pass-through’ tax entities; profits and losses pass through to the owners’ personal tax returns. Creating an LLC is relatively simple, involving state filings and modest fees.
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In case you missed it, check out our last Title Junction post: Why Homebuyers Should Care about Flood Plains