What is a primary feature of an LLC?

What is a primary feature of an LLC?

• A. It has an unlimited lifespan
• B. It can issue publicly traded shares
• C. It combines features of corporations and partnerships
• D. It is owned by a sole proprietor

Answer: (C)

The primary feature of an LLC, or Limited Liability Company, is that it combines features of both corporations and partnerships. This hybrid structure provides the limited liability protection that corporate owners enjoy while allowing for the flexibility and tax benefits typically associated with partnerships. In an LLC, the owners, known as members, are not personally liable for the debts of the business, much like shareholders in a corporation. At the same time, LLCs offer the ability to be taxed as a pass-through entity, similar to partnerships, where income is reported on the owners' personal tax returns instead of being taxed at both corporate and individual levels. This combination makes LLCs an attractive option for many business owners who want to limit their liability while maintaining operational flexibility. The other options are not representative of the defining characteristics of an LLC. For example, an LLC does not have an unlimited lifespan like corporations, which can continue indefinitely; it also cannot issue publicly traded shares, as it's typically a private entity; and it is not synonymous with sole proprietorship, which refers specifically to a business owned by one individual without the limited liability protections that an LLC offers.

The primary feature of an LLC, or Limited Liability Company, is that it combines features of both corporations and partnerships. This hybrid structure provides the limited liability protection that corporate owners enjoy while allowing for the flexibility and tax benefits typically associated with partnerships.

In an LLC, the owners, known as members, are not personally liable for the debts of the business, much like shareholders in a corporation. At the same time, LLCs offer the ability to be taxed as a pass-through entity, similar to partnerships, where income is reported on the owners' personal tax returns instead of being taxed at both corporate and individual levels. This combination makes LLCs an attractive option for many business owners who want to limit their liability while maintaining operational flexibility.

The other options are not representative of the defining characteristics of an LLC. For example, an LLC does not have an unlimited lifespan like corporations, which can continue indefinitely; it also cannot issue publicly traded shares, as it's typically a private entity; and it is not synonymous with sole proprietorship, which refers specifically to a business owned by one individual without the limited liability protections that an LLC offers.