E. Limited Liability Company (LLC)

The LLC protects its members, or owners, from personal liability and limits debts and legal claims to business assets only.  Like sole proprietors and partnerships, LLCs are taxed on the individual level, so members report business earnings on personal tax returns.  The LLC structure allows for one or more business owners and requires the filing of legal documents with the state.  While the LLC typically requires more legal formalities and startup costs than a sole proprietorship or partnership, it offers significant benefits in liability protection.