Definition
A limited liability company (LLC) is a business legal structure: member liability for company debts is limited to their investment, personal assets are generally shielded, and taxation and internal management stay flexible. The form is mainly used in the United States and jurisdictions with similar rules.
How it works
An LLC combines traits of corporations and partnerships: it provides liability protection like a corporation while letting members set their own profit-sharing and management terms, and it can often be taxed as a pass-through entity. Formation requires filing formation documents and paying fees under state law.
Usage
The LLC is a common choice for small teams, independent developers and consultancies registering in the US, and startups often start out as one. When tech circles say “formed an LLC”, they usually mean this structure.
Related and confusable terms
An LLC and a corporation both limit liability, but corporations have more standardized equity, governance and tax arrangements suited to outside fundraising; LLCs are more flexible, yet not every investor accepts the structure.