 Hello. In this lecture, we will define limited liability company. According to fundamental accounting principles, Wild 22nd edition, the definition of limited liability company is organization form that combines select features of a corporation and limited partnership provides limited liability to its members, owners, is free from business tax and allows members to actively participate in management. When we think about a limited liability company, we're thinking about getting the best from both worlds of a traditional C corporation and a pass-through entity such as a partnership, including the idea of having free business tax, meaning that the tax will not be assessed on the business level but will flow through to the individual level, a feature generally of a general partnership and to have members to actively participate in management, a feature often associated with a partnership. But having the limited liability, a feature often associated with the C corporation. So, if we had a limited liability corporation, the idea of a corporation is that we want to keep that corporation separate from the owner. In terms of a corporation, we have a separate legal entity. Because it's a separate legal entity, the corporation itself, its assets and liabilities are subject to any problems on the corporate level, but there is a divide from the personal assets of the owner. So, the owners put money into the corporation as an investment within the corporation. If there's a problem or a lawsuit, then the lawsuit happens to the corporation, it being a separate legal entity, and the assets of the owners that are not within the corporation should be separate, providing more liability protection to the owners. The idea of a limited liability company is to have that similar liability protection in the liability company as would be there from a C corporation. The problem with a C corporation is that because it's a separate legal entity, it also is subject to separate taxation at the corporate level. And that tax also is going to be taxed on the individual level at the point of distribution when it's a C corporation in the form of dividends, resulting in double taxation. That's one of the major problems with a C corporation for a limited liability company looking to eliminate that problem by allowing the flow through of the income tax to the owners flowing through from the limited liability, the business entity to the individual 1040s being taxed then on the individual level, eliminating that double taxation problem. So we have the best of both worlds. We have the more limited more liability protection, as would be the case for a corporation. And we have the pass through entity so that we are avoiding the double taxation, the taxation on both the business level and on the individual level.