A limited liability company is a flexible legal entity used for many purposes in the United States

Imagine you are starting a cafe and want a legal entity to sign a lease, open a bank account, and hire employees.

 

Now imagine you own a rental property and don't want to be sued personally if someone slips and falls on a slippery patch.

 

Now imagine you're a club manager and need to collect member dues without mixing them with your own funds.

 

In each of these scenarios, you would want to set up a legal entity that is separate from yourself. But before the 1970's, you would have to form a corporation or a partnership.

 

But corporations and partnerships are cumbersome - they must issue stock, hold annual general meetings, and pay hefty annual fees.

 

Beginning in the 1970's, States began to create laws that allowed for a more lightweight, flexible legal entity: the LLC. LLC's are cheap and easy to set up, don't require stock issuances, and require only minimal annual reporting.

 

Today, LLC's are used for all sorts of purposes - they control operational businesses, they facilitate joint financial accounts, and they hold assets.