QUESTION:

How does a LLC compare with other business entities?

ANSWER:

The LLC is most similar to the limited partnership and the general partnership, although it shares some state law concepts with the corporation.  As a pass-through entity for tax purposes, the LLC is more advantageous for closely held businesses than the S corporation with its cumbersome and artificial restrictions.  Further, because of its complete liability shield, the LLC has advantages over general and limited partnerships.

(The next few weeks will compare some common tax and nontax attributes of the LLC with the limited partnership, S corporation, C corporation, and the limited liability partnership.)