Doing business with an LLC or a Limited Liability Company is flexible and sensible in the long run. This gives you the advantage of getting tax benefits as for a partnership and the personal protection offered to corporations against business debts all rolled into one.
Forming a limited liability company requires a few steps that you have to take such as choosing a name, preparing the Articles of Organization, forming a structure to help with the management, creating an Operating Agreement and dealing with the legal and tax documentation. The profits and losses relating to the business pass directly onto the owners and therefore double taxation is avoided when you form a limited liability company. This is certainly an advantage the LLC has over a corporation. A Form 1065 is filed by the LLC along with a Form K-1 which lists the taxable profit due to each member. Thus, the LLC itself does not have to file taxes.
Forming an LLC has many advantages and the drawback that it has is purely due to the fact that they are new to the arena and is not very well established. This will change with time as it is already becoming quite popular. It is well worth studying the rules and regulations relating to the forming of LLCs in the state you hope to operate in as this differs with each state. The best way to go about it is to consult legal opinion and clear up any doubts that you may have in your mind.