An LLC is a type of business entity that is a combination of a sole proprietorship
and a partnership
. Like a corporation, an LLC can have a bank account, buy property and hire employees.
One perk of an LLC company is that it offers liability protection. So if your business faces debt or legal trouble, you’re personally protected and your private assets are safe.
The owner of an LLC is called a member. LLCs can have only one or multiple members owning different percentages of the business. Even though more than one person can own it, someone cannot buy their way into becoming an owner. So with an LLC, you can’t sell any stock like you can with a corporation.
Some famous LLC examples include Hertz, Sony, Nike, eBay, IBM and Amazon.
Now let’s answer the question, how does an LLC work?
The members, or owners, share in the profits and losses of the business. You don’t need an operating agreement, which defines the responsibilities and investor percentages, to start an LLC.