Limited Liability Company

Also called LLC

A limited liability company: a flexible US structure that shields owners from personal liability and passes profits through to them without corporate-level tax. Simpler than a corporation.

Why it matters

An LLC suits small businesses and bootstrappers for its simplicity and tax treatment, but it does not fit venture funding well. Founders planning to raise usually start as, or convert to, a C-corp instead.

For example

A solo consultant forms an LLC for liability protection and pass-through taxes, a fit for a small business but not for a startup planning to raise venture money.

Related terms

C-Corporation Incorporation Limited Liability Partnership

Go deeper

See how founders actually handle this on Co-founders, team and legal, part of the Starting Up hub.

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