What is LLC (Limited Liability Company)
Limited Liability Company (LLC) is a legal business structure formed under each state laws and it has characteristics of a corporation (mainly 'limited liability') and a partnership or sole proprietorship (availability of pass-through income taxation). Owners of an LLC are called members. Most states do not restrict ownership, and so members may include individuals (US or non US residents), corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit “single-member” LLCs, those having only one owner. LLC members are subject to the same alter ego piercing practices as corporate shareholders. However, it is more difficult to pierce the LLC veil because LLCs do not have many formalities to maintain. So long as the LLC and the members do not commingle funds, it would be difficult to pierce its veil.
A few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs.