A limited liability company (LLC) offers protection from personal liability for business debts, just like a corporation. However, unlike a corporation, which must pay its own taxes, an LLC is a pass-through tax entity: The profits and losses of the business pass through to its owners, who report them on their personal tax returns, just as they would if they owned a partnership or sole proprietorship. Also, while setting up an LLC is more difficult than creating a partnership or sole proprietorship, running one is significantly easier than running a corporation.
Read more here:
Limited Liability Company (LLC) FAQ
http://www.irs.gov/businesses/small/article/0,,id=98277,00.html
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