What type of entity combines characteristics of partnerships and corporations in terms of taxation?

A Limited Liability Company (LLC) is known for combining the characteristics of both partnerships and corporations, particularly when it comes to taxation. LLCs provide the owners, who are referred to as members, with limited liability protection, similar to that of a corporation. This means members are generally not personally responsible for the debts and liabilities of the LLC.

In terms of taxation, LLCs have the flexibility to choose how they want to be taxed. By default, an LLC is treated as a pass-through entity, like a partnership, where profits and losses are reported on the personal tax returns of the members, avoiding double taxation. However, an LLC can also choose to be taxed as a corporation if that better fits their financial situation. This versatility makes the LLC an attractive option for many business owners looking for a blend of partnership benefits and corporate protection.

In contrast, an S Corporation also offers limited liability and has pass-through taxation, but it comes with additional restrictions, such as limits on the number and type of shareholders. A joint venture is a temporary arrangement between two or more parties to undertake a specific project, typically without the same legal protections as an LLC, and a general partnership does not provide limited liability to its partners. Thus, the LLC stands out as