What is a limited liability company (LLC)?

A limited liability company (LLC) is a business structure that effectively combines the benefits of limited liability protection and the tax advantages typically associated with a partnership. This means that the owners, often referred to as members, enjoy protection from personal liability for business debts, similar to a corporation, while also having the option to pass through income to their personal tax returns without facing double taxation, which is a characteristic of partnerships.

This unique structure allows for flexibility in management and operations, making it an attractive option for many small businesses. The ability to protect personal assets from business liabilities while enjoying favorable tax treatment is what defines the LLC, making option A the correct choice. Other options, such as a corporation focused only on profit generation, a partnership for professionals, or a government entity managing public funds, do not encapsulate the distinct characteristics and advantages of an LLC.