LLC (Limited Liability Company)
A pass-through business entity that can separate business and personal liability if it is properly maintained. It is not a substitute for insurance and usually does not by itself change your income tax.
An LLC is a business structure that can wall off business liabilities from your personal assets, but only if you actually keep the two separate. Mixing personal and business money, a habit called commingling, can let a court pierce the veil and undo that protection, so an LLC is a discipline as much as a filing.
It is not a replacement for proper insurance, and as a pass-through it usually does not change your income tax by itself. Annual state costs vary a lot, from roughly 60 dollars in Wyoming to an 800 dollar minimum franchise tax in California. This is education, not legal or tax advice, so confirm the right setup with a CPA or attorney.
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Related terms: Startup Cost
Last updated . Part of the FinExplained finance glossary .