I should start with something simple.  I get this question frequently: What is a Limited Liability Company? Sometimes people mistakenly call it a limited liability corporation or some other variation.  This underscores the general confusion about what an LLC is.  LLC’s were first adopted in 1977 in Wyoming, and Hawaii was the last of the states to adopt LLC’s, in 1997. When Hawaii passed its LLC law, I wrote an article for the local newspaper introducing the local public to LLC’s, stating: The primary attraction of an LLC is that it provides businesses with the liability protection usually accorded only to corporations, yet the LLC may be taxed under more favorable partnership rules. Indeed, the easiest way to think of the LLC is that it is a hybrid of corporation and partnership law. While useful, this explanation is a bit simplistic, however, as Hawaii also allows single-member LLC’s, and a LLC may elect to be taxed as a corporation rather than as a partnership. Multiple-member LLC’s can also elect to be member-managed, where members have full management power, or manager-managed, where not all members are given management authority. People choose LLC’s not only for the liability protection and favorable tax options, but also for the flexibility of governance. The thing to remember, however, is that choosing the right type of entity is extremely important and, if possible, should be accomplished with the input of an accountant and attorney.  (Of course, as an attorney, I would have to add that, wouldn’t I!)