Most states require that business entities which limit their liability must declare so openly, which is intended to provide notice to those doing business with them. Certain business entities limit their liability right up front, before they even engage in any contracts or business transactions. Limited Liability Companies, or LLCs, combine many facets of corporate structure with the smaller and simpler partnership structure. Third persons are immediately placed on notice of a LLC’s liability limitations by the very name of the company, which, in most states, must included the “LLC” designation as part of its company name.
In a LLC, individual owners are not personally liable for company debts and obligations, including monetary damages awarded against the company in a law suit. This means that if company assets are sold off to meet liabilities, the owners do not need to use their personal assets to make good on business losses.