What Are the Different Types of LLCs in the U.S. — All Explained!
When starting a business in the United States, one of the most common structures entrepreneurs consider is the Limited Liability Company (LLC). An LLC combines the flexibility of a partnership with the liability protection of a corporation. But here’s what many new business owners don’t realize: there are actually different types of LLCs, and the one you choose can affect everything from your taxes to your daily operations.
Table of Contents: —
What Is an LLC?
Before we get into the types, let’s start with the basics.
An LLC, or Limited Liability Company, is a legal business entity that protects its owners (called “members”) from being personally responsible for the company’s debts or liabilities. That means if the business faces a lawsuit or financial trouble, your personal assets—like your house or savings—are usually safe.
LLCs are popular because they combine the best of both worlds:
- Flexibility (like partnerships)
- Legal protection (like corporations)
Now, let’s explore the different variations of LLCs you can form in the U.S.
Quick Comparison of LLC Types: —
Here’s a simple table that breaks down the most common types of LLCs:
| Type of LLC | Ownership | Management Style | Best For |
| Single-Member LLC | One owner | Owner-managed | Freelancers, solo entrepreneurs who want simplicity and liability protection |
| Multi-Member LLC | Two or more owners | Members share control | Co-founders, family-owned businesses, small partnerships |
| Member-Managed LLC | One or more members | Owners run daily ops | Small businesses where members want hands-on control |
| Manager-Managed LLC | One or more members | Appointed managers | Investors or owners who prefer not to handle daily decisions |
| Professional LLC (PLLC) | Licensed professionals | Varies by agreement | Doctors, lawyers, accountants, architects |
| Series LLC | One LLC with sub-LLCs | Each series is separate | Real estate investors, franchises, multi-venture businesses |
| Nonprofit LLC | Members with a mission | Governed by bylaws | Charities, community-focused groups |
| Anonymous LLC | Owners not disclosed | Flexible | Entrepreneurs who value privacy |
| L3C (Low-Profit LLC) | Social entrepreneurs | Member or manager-led | Mission-driven businesses balancing profit and social impact |
1. Single-Member LLC:
As the name suggests, a single-member LLC has only one owner.
Key features:
- The owner has complete control over the business.
- It’s treated like a “disregarded entity” by the IRS, meaning the profits and losses pass directly to the owner’s personal tax return.
- Liability protection still applies, separating personal and business assets.
Best for: Freelancers, consultants, and solo entrepreneurs who want liability protection without complicated tax filings.
2. Multi-Member LLC:
A multi-member LLC has two or more owners. These owners can be individuals, corporations, or even other LLCs.
Key features:
- Profits and losses are divided among members, usually based on ownership percentages.
- Members must create an operating agreement to outline roles, responsibilities, and profit-sharing.
- The IRS treats it as a partnership for tax purposes (unless members choose to be taxed as a corporation).
Best for: Small businesses with co-founders, family-owned ventures, or groups of investors.
3. Member-Managed LLC:
In a member-managed LLC, the owners (members) are directly involved in running the business. They make day-to-day decisions and handle operations themselves.
Key features:
- Simple and cost-effective to set up.
- All members share decision-making authority.
- Works best when members are active in the business and trust each other.
Best for: Small businesses where owners want to stay hands-on and actively manage the company.
4. Manager-Managed LLC:
In a manager-managed LLC, the members appoint one or more managers to run the company. These managers may or may not be members themselves.
Key features:
- Members act more like investors while managers handle daily operations.
- This structure allows for a more “corporate” style of management.
- It’s often used when some members don’t want to be involved in everyday business decisions.
Best for: Larger businesses or those with passive investors who prefer not to manage operations.
5. Professional LLC (PLLC):
Certain licensed professionals, like doctors, lawyers, accountants, and architects, are required to form a Professional LLC (PLLC) if they want to operate as an LLC.
Key features:
- Members must hold valid professional licenses.
- Liability protection applies to business debts but not to personal malpractice claims.
- Typically governed by state-specific regulations.
Best for: Licensed professionals who want liability protection and a flexible structure.
6. Series LLC:
A series LLC is more complex and only available in certain states (like Delaware, Texas, and Illinois). It allows one main LLC to create multiple “series” or sub-LLCs under it.
Key features:
- Each series operates like its own separate entity with its own assets, liabilities, and members.
- If one series faces legal trouble, the others are usually protected.
- Saves costs compared to forming multiple separate LLCs.
Best for: Real estate investors, franchises, or businesses that manage multiple assets or ventures under one umbrella.
7. Nonprofit LLC:
Although not very common, it’s possible to form a nonprofit LLC. These are typically set up to serve charitable, educational, or religious purposes.
Key features:
- Must be formed with a nonprofit purpose and approved by the IRS to qualify for tax-exempt status.
- No profits can be distributed to members; all funds must go back into the organization.
- Compliance and paperwork are stricter than those of regular LLCs.
Best for: Community organizations, nonprofits, or social enterprises.
8. Anonymous LLC:
An anonymous LLC is formed in states like New Mexico, Nevada, or Wyoming, where member information isn’t required to be publicly disclosed.
Key features:
- Provides extra privacy and security for members.
- Still offers liability protection like a regular LLC.
- Often used by investors or entrepreneurs who prefer to keep ownership details private.
Best for: Business owners who value privacy or wish to separate personal identity from their business.
9. L3C (Low-Profit Limited Liability Company):
The L3C is a special type of LLC designed for businesses that aim to make a modest profit while primarily serving a social mission.
Key features:
- Blends elements of nonprofits and for-profit LLCs.
- Attracts investors interested in social impact.
- Not available in all states.
Best for: Social entrepreneurs who want to balance impact and profit.
Which Type of LLC Should You Choose?
The right type of LLC depends on your business goals, industry, and long-term vision. Here are some quick pointers:
- Solo entrepreneur? → Single-member LLC
- Starting with partners? → Multi-member LLC
- Want to stay hands-on? → Member-managed LLC
- Prefer investors handle money, not decisions? → Manager-managed LLC
- Licensed professional? → Professional LLC
- Managing multiple properties or ventures? → Series LLC
- Running a charity or mission-driven group? → Nonprofit LLC or L3C
- Want privacy? → Anonymous LLC
Final Thoughts: —
Forming an LLC is one of the smartest steps you can take to protect yourself legally and structure your business effectively. But not all LLCs are the same. By understanding the different types—whether it’s a single-member LLC, a professional LLC, or even a series LLC—you can make the right choice for your goals.
Before forming one, it’s always best to check your state’s requirements and consult with a legal or tax professional to ensure you’re setting up your business correctly.
