A Limited Liability Company or LLC, is a hybrid entity bringing together some of the best features of partnerships and corporations. An LLC is a much better entity for tax purposes.

LLCs provide the liability protection of corporations without the double taxation. Profits and losses pass through the shareholders and are reported on their personal tax returns. Although very similar to an S Corporation, the LLC also can have any number of shareholders, where the S Corporation can only have 75 shareholders.

The tax treatment for an LLC varies by state. If you decide on an LLC, be sure to involve an experienced accountant who is familiar with the various rules covering an LLC.