History

• The first LLC was formed in Wyoming in 1977, but LLCs did not become common until the 1990s. Laws regarding LLCs vary among states, so you should seek legal advice before forming an LLC.
  
  

Function

• An LLC can have an unlimited number of members, unlike an S corporation, in which ownership is limited. An LLC's members can include other companies and foreign nationals, as well as individuals.
  
  

Features

• An LLC can "pass through" profits to members, who report them as income on their personal federal tax returns. This avoids "double taxation" at both the corporate and personal levels.
  
  

Benefits

• Members are not personally liable for the debts of the company. If the company goes bankrupt or is sued, the members may lose their investment, but their personal assets are not at risk.
  
  

Considerations

• Many banks will ask the members of an LLC to personally guarantee any loans, meaning that if the business cannot repay its debt, the owners are still responsible, even if it means using personal assets.