But the liability exposure that remains after an LLC is formed does not prevent LLCs from being an attractive business entity. LLC members are liable only up to the amount of their capital contributions and the amount they agree to contribute to the firm's capital. Of course, limited liability is not granted at the expense of creditors. Many state LLC statutes require disclosure of members' agreed-upon contributions, and will limit distributions to members so that they cannot raid the LLC assets and make it unable to pay its debts. Perhaps the best way to think about limited liability is to consider it as corporate-type limited liability.
Limited liability is a valuable asset, especially when combined with partnership tax status.
In an LLC, income passes through the LLC directly to the member who is then taxed as a partner. The LLC itself is not taxed. In a corporation, both the corporation and the shareholder are separately taxed. Generally, LLC management is conducted by the members or by managers. Managers are typically elected according to either the applicable LLC statute or the operating agreement.