Which of the following statements is true regarding limited liability companies (LLCs)?

Limited liability companies (LLCs) are designed to provide personal liability protection to their owners, known as members. This means that the personal assets of the members are generally protected from the liabilities and debts incurred by the LLC. For instance, if the company faces lawsuits or fails to meet financial obligations, creditors typically cannot pursue the personal belongings or assets of the members to satisfy the company's debts. This characteristic is a major advantage of choosing an LLC as a business structure, allowing for a blend of operational flexibility and protection similar to that of corporations.

In addition, while each state has its own regulations, an LLC can be formed with a single member; thus, the requirement for a minimum number of members is less stringent compared to some other business forms. The flexibility in taxation allows LLCs to choose between being taxed as a sole proprietorship (if single-member) or partnership (if multi-member) rather than operating solely at a corporate tax level, which can create further advantages in terms of tax efficiency and reporting obligations.