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Limited Liability Company (LLC) Definition

What is a Limited Liability Company (LLC)?

A Brief Explanation of a Limited Liability Company (LLC) | Definition

A limited liability company (LLC) is a type of company that provides limited liability to its shareholders. The exact definition of a limited liability company varies country to country and even state to state. However, generally LLC’s are formed to reduce and separate the risk of a company from its owners. A limited liability company differs from a corporation in that a corporation is a legal entity separate from the owners and has distinct legal rights. A llc dissolves upon the death or bankruptcy of an owner whereas a corporation is an entity totally separate from the shareholders.

There are many disadvantages and advantages to forming a limited liability company. A LLC is a good way for the partners of a company to reduce the risks and debts associated with a company. However, companies that eventually wish to go public through an IPO should incorporate rather than form an llc.

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