What is a limited liability company (LLC) and how is it formed?

An LLC is a hybrid between a corporation and a partnership in which owners, called members, have the same limited liability of shareholders, with the benefit of [pass-through tax treatment](tooltipId:522). Organizers must file Articles of Incorporation with the secretary of state, and may adopt an [operating agreement](tooltipId:523) in order to form the LLC. Like partners, members may control the business, but also may choose to delegate control to a team of managers. A full membership interest may not be transferred without unanimous consent of all members provided in the operating agreement. Profits and losses are allocated on the basis of member contributions. Finally, the Articles of Organization or operating agreement must indicate some event of dissolution (unlike general partnerships, LLCs may not exist in perpetuity).