A limited liability company, or "LLC" is a newer, but increasingly popular business form. LLCs are essentially a hybrid of a corporation and a partnership, with the benefits of both. Like corporations, LLCs offer limited liability to their owners, and the ability to raise investment capital from shareholders. And like partnerships, LLCs can be taxed only once, and members manage the affairs of the business through an operating agreement.

The LLC operating agreement determines the relative rights and responsibilities of all the stakeholders in the business, who are referred to as "members". Depending on the preference of the members, the company can be managed by the members themselves, or professional managers. Decisions making authority can be delegated by each members respective investment, or equally among the members, or any arrangement in between. Federal income tax rules allow the LLC members to decide whether they want the LLC to be taxed as a corporation (profits and losses are attributable solely to the LLC) or as a partnership (profits and losses pass through to the members).

LLCs must be registered under state law, and implement a name that informs the public of their limited liability status. Though there are fewer formalities involved with owning an LLC than there are with a corporation, there are still a number that must be followed. For example, members who are not assigned managerial rights should never involve themselves in the management of the company, and business funds should never be mingled with personal funds- both such actions could destroy limited liability status.