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What is a limited liability company (LLC)? (New Business Checklist)

This type of organization is a more recent invention. It typically combines the liability protection of a corporation with a tax structure similar to that of a partnership. As with a corporation, there is more legal separation between you and your business than with other types of organization; this offers greater liability protection of your personal assets. As with a partnership, generally income is only taxed once, as personal income. Relative to a partnership, the disadvantage is that a limited liability company is more expensive and more difficult to set up.

Depending on where you plan on conducting business, another disadvantage of LLCs is that some states impose special taxes.

Talk to your attorney for more information about forming an LLC.

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