What distinguishes Limited Liability Companies (LLCs) from corporations?

Limited Liability Companies (LLCs) are distinct from corporations primarily in their structure and taxation. The correct option highlights that LLCs offer owners limited liability similar to corporations, meaning that the personal assets of the owners (members) are generally protected from business debts and liabilities. This is a critical feature of both business entities, allowing for a safeguard against personal financial loss due to business issues.

Additionally, one of the significant benefits of LLCs is their taxation. Unlike corporations that may face double taxation (once at the corporate level and again when dividends are distributed to shareholders), LLCs typically enjoy pass-through taxation. This means that the income of the LLC is passed directly to the members, who report it on their personal tax returns, thereby avoiding double taxation. This combination of limited liability protection and favorable tax treatment is a compelling reason why many choose to form LLCs.

The other options do not accurately capture the unique aspects of LLCs. Articles of incorporation pertain specifically to corporations, and while an LLC can be formed with one individual, it is not limited to this structure. Lastly, the idea that LLCs cannot have members who are corporations is incorrect, as LLCs can indeed have corporate members, further enhancing their flexibility.