What type of business organization allows for personal liability protection to its owners but is taxed as a partnership?

A limited liability company (LLC) is a unique type of business organization that provides personal liability protection to its owners, commonly referred to as members. This means that the personal assets of the members are generally protected from business debts and liabilities, which is a significant advantage when compared to other business structures like sole proprietorships or general partnerships, where personal liability can extend to the owners' personal assets.

Additionally, an LLC can choose to be taxed as a partnership, which allows the income to flow through to the members' personal tax returns, avoiding the issue of double taxation that corporations often face. This taxation structure helps LLC owners to benefit from the simplified reporting and potential tax benefits of partnership taxation while still enjoying the liability protection that the LLC provides.

This makes an LLC an attractive option for small business owners who are looking for both liability protection and favorable tax treatment, aligning with their needs for security and efficiency in business operations.