LLC - Limited Liability Company
Limited Liability Company LLC Books

A Limited Liability Company (LLC) is sort of a cross between a partnership and a corporation.  A small business formed as an LLC affords its owners the advantages of limited liability (little or no personal liability like corporate shareholders have) along with pass-through taxation (a tax saving benefit enjoyed by partnerships and sole proprietorships).

Forming the LLC

Forming a LLC is a little more complicated than forming a partnership and less complicated than incorporating.  There are several steps that will need to be taken to make it all legal.  The company must be named, articles of organization need to be filed and fees paid, an LLC operating agreement must be created, and licenses and permits must be obtained where required.  The book Nolo's Quick LLC: All You Need to Know About Limited Liability Companies explains forming an LLC in great detail.

LLC Taxation

Because a corporation is considered an entity separate from its owners, it is required to pay federal taxes.  An LLC is different. It's more like a partnership or sole proprietorship in that; the profits and losses and associated tax responsibilities are divided up and passed through to the owners. Again, Nolo's Quick LLC is recommended.

Other Things to Note

LLC owners are also known as members.  Single member LLCs are allowed in most states and there is no maximum number or type of members allowed.  An attorney is not required - you can prepare the documents and complete the requirements yourself.  Though not required by most States, an Operating Agreement is highly recommended.