Entities
LLC
Also known as Limited Liability Company
An LLC, or Limited Liability Company, is a US business structure that separates the owners' personal assets from the company's debts and liabilities. An LLC is created by filing formation documents with a US state. By default the IRS does not tax an LLC at the company level; profit passes through to its owners.
In plain terms: A company that shields your personal money from business debts, without the paperwork a corporation requires.
Why it matters
The LLC is the default choice for most founders because it gives liability protection without a board, minutes, bylaws or minimum capital. It is also flexible in a way people underuse: an LLC can elect to be taxed as an S-Corporation or C-Corporation without changing its legal form, so the tax treatment is a dial you can turn later.
Example
A freelance developer forms a Wyoming LLC for $100. A client later disputes a project and sues. The claim is against the LLC's assets, not the developer's personal savings.
Common misunderstanding
That an LLC reduces tax. By default it does not change what you pay at all — it changes who is liable. Tax treatment is a separate election.
Read the full guideUS company formationRelated terms
Source: IRS — Limited Liability Company. This is a definition, not tax or legal advice — verify against the primary source before acting.