The limited liability company combines aspects of both a corporation and a partnership.  The LLC enables shareholders to achieve limited personal liability while still retaining the pass-through characteristics found in a general partnership.  Typically, two shareholders are required.  One is a possibility in a growing number of states, but there could be liability considerations against third-party claims.  The LLC under normal circumstances is responsible for business debts.  One exception would be where a member shareholder personally acts as a guarantor of debt.

The LLC is controlled by its members in proportion to profit ratios as established in the Articles of Organization or the firm’s operational agreement.  Similar to a partnership, new member shareholders must be approved through partners holding a majority interest in the LLC.  Typically, an LLC can exist until the death or withdrawal of a member.  Even at that juncture, if members holding a majority interest decide to do so, it is possible for the LLC to continue.  The formalities are very similar to that of a corporation in that Articles of Organization must be filed, with the subsequent drafting of an Operating Agreement.

From a liability standpoint, LLCs are more like a corporation, but from a tax perspective, they are more similar to a Partnership.