What is a Limited Liability Company (LLC)?

A Limited Liability Company (LLC) is correctly identified as a hybrid structure that combines features of both partnerships and corporations while providing limited liability protection to its owners, known as members. This means that the personal assets of the members are typically protected from the business's debts and liabilities, which is similar to the protection offered by a corporation. At the same time, LLCs offer flexibility in terms of management and taxation, resembling the operational structure of partnerships.

Members of an LLC can choose whether they want to be taxed as a partnership (which allows for pass-through taxation) or as a corporation. This flexibility and the blend of characteristics make LLCs an appealing choice for many small business owners and entrepreneurs who want limited liability without the formalities of a corporation.

The other choices do not accurately define an LLC. For instance, a sole proprietorship does not provide limited personal liability, and a corporation has owners (shareholders), contrary to the statement implying it has none. Additionally, the idea of a partnership without legal obligations does not capture the essence of an LLC, which does have legal structures and requirements.