Which of the following statements is TRUE for a limited liability company?
A)Members have unlimited liability for the debts of the business.
B)Members have limited liability for debts only up to the extent of their investment in the LLC.
C)Only the limited partners have limited liability for the debts of the business.
D)Members are not taxed like members of a partnership.

Question

Quizplus · Accepted Answer

A limited liability company (LLC) provides limited liability protection to its members, meaning that their personal assets are generally protected from the debts and liabilities of the business. Members are only liable for the debts of the business up to the amount of their investment in the LLC. Option A is incorrect because it states that members have unlimited liability, which is not true. Option C is incorrect because limited partners are typically associated with a limited partnership, not an LLC. Option D is incorrect because LLCs are taxed as pass-through entities, meaning that the profits and losses of the business are passed through to the members and reported on their individual tax returns, similar to a partnership.

Which of the Following Statements Is TRUE for a Limited