What is a key advantage of an LLC compared to a corporation?

An LLC, or Limited Liability Company, offers a significant advantage in terms of limited personal liability for its owners, also known as members. This means that members are generally not personally responsible for the debts and liabilities of the business beyond their initial investment. In contrast, while corporations also provide limited liability protection, the structure and complexity of a corporation often involve additional regulations and requirements.

This limited liability feature allows members to protect their personal assets from lawsuits or creditors seeking repayment from the business, providing a layer of financial security. This is especially beneficial for small business owners who want to mitigate risk while enjoying the flexibility and tax advantages that an LLC can offer.

In this context, the other choices highlight characteristics more aligned with corporations. The ability to issue stocks is a fundamental feature of corporations, while strict compliance regulations often encumber corporations due to the need for formalities like annual meetings and record-keeping. The concept of an unlimited number of shareholders is also a trait of corporations, which can raise capital through stock issuance, making the LLC's flexibility and liability protection particularly appealing for many small business owners.