An LLC (limited liability company) is a business entity that combines the limited personal liability of a corporation with the flexibility and taxation benefits of a partnership. An LLC provides its owners, known as members, with protection from creditors and lawsuits while allowing them to pass profits and losses through to their individual tax returns. This allows for greater flexibility in how the business is managed compared to other types of entities.
Unlike corporations, an LLC does not require shareholders or directors, meaning members have more control over their own operations. There are no restrictions on who can be an owner of an LLC; they can be individuals or companies. As such, it is possible for non-US citizens living outside the US to form an LLC within the United States without having any physical presence in the country.
Unlike sole proprietorships or partnerships which are subject to double taxation where income is taxed at both corporate and personal levels, taxes on an LLC flow through directly to each member’s individual tax return; thereby avoiding double taxation altogether.