Limited Liability Company (LLC)

A Limited Liability Company is governed primarily by its LLC or operating agreement and combine the characteristics of a corporation with those of a partnership or sole proprietorship. In general, LLCs are not taxed separately from their owners.

Because of the difficulty of this tax structure from an investment standpoint, and due to certain rules governing institutional investors (VCs), very few institutional investors will invest in LLCs. For this reason, LLCs are rarely used as the entity of choice for a tech startup.