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An LLC (Limited Liability Company) is a business structure that provides personal liability protection while offering tax flexibility and operational simplicity. The main advantages include separation of personal and business assets, which protects owners' personal property from business debts and lawsuits. LLCs avoid double taxation since profits and losses pass through to owners' personal tax returns. They require less paperwork and formalities than corporations, with flexible management structures that can be member-managed or manager-managed. Most states allow single-member LLCs, making them ideal for solo entrepreneurs. Annual reporting requirements are typically minimal compared to corporations, though they vary by state.

The cost to form an LLC in the United States typically ranges from $50 to $500 plus state filing fees, which vary by state from approximately $40 to $500. Most states charge between $100 and $200 for the initial Articles of Organization filing. Additional costs may include registered agent services ($50-$300 annually), operating agreement preparation ($100-$500 if using legal services), and business license fees ($50-$400 depending on location and industry). Some states require publication costs in local newspapers, which can add $50-$1,000. Ongoing expenses include annual report fees ($0-$300) and franchise taxes in certain states. Many online formation services offer packages from $0 to $300 plus state fees, with premium services including registered agent coverage and compliance monitoring.

The key differences between LLCs and corporations center on taxation, management structure, and formal requirements. LLCs offer pass-through taxation where profits and losses flow to owners' personal tax returns, avoiding corporate double taxation. Corporations face double taxation with corporate income tax and shareholder dividend taxes. LLCs have flexible management structures that can be member-managed or manager-managed with minimal formalities, while corporations require a board of directors, officers, and regular shareholder meetings with detailed minutes. Ownership in corporations is represented by shares of stock, whereas LLCs use membership interests without stock certificates. Corporations provide stronger liability protection in some cases but require more extensive record-keeping and compliance. LLCs are generally simpler to maintain with fewer ongoing formalities and reporting requirements than corporations.