Final answer:
An LLC's members have limited liability and are not personally liable for the company's debts; the LLC is treated as a pass-through entity for taxes. In contrast, a corporation is taxed as a separate entity but also provides limited liability. Both structures protect personal assets but have different tax implications.
Step-by-step explanation:
The characteristics of a Limited Liability Company (LLC) indeed include that the owners are called members and they are not personally liable for the debts and actions of the business, which means they enjoy limited liability. The LLC is a popular choice for small to medium-sized businesses because it combines the liability protection of a corporation with the tax benefits of a partnership or sole proprietorship. One key feature is that LLCs are often treated as pass-through entities for tax purposes, where the company itself is not taxed. Instead, profits and losses are reported on the personal tax returns of the members. However, LLC owners are not exempt from liability arising from wrongful acts they commit in the course of business operations.
A corporation provides similar protections in terms of limited shareholder liability, but it is considered a separate tax entity. This difference means corporations may be taxed on their profits, and shareholders are also taxed on their dividends, known as double taxation. Nonetheless, corporations can raise capital through the sale of stock and can have an unlimited life span, unlike some partnerships. By incorporating, business owners can protect personal assets and attract investors more easily due to the structure's capacity to limit personal liability.