A limited liability company (LLC) is a company whose members are not legally responsible for its debts and other liabilities. Although companies opt for LLC status because it reduces risk, many of them still purchase business insurance to cover the remaining risks.
Limited liability companies are not subjected to the same taxes as corporations. Instead, the income LLC owners draw from the company is taxed as personal income.
Even though LLC's have limited liability and owners cannot be held individually responsible for company debt, they can still be sued. Therefore, it is wise for LLC owners to have some type of commercial insurance to avoid having to file for bankruptcy as a result of an expensive lawsuit.
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