Which of the following is a benefit of an LLC?

• A. Double taxation on profits
• B. Limited personal liability of the members
• C. Full liability on business debts
• D. Restriction on business ownership

Answer: (B)

The benefit of an LLC, or Limited Liability Company, lies in the limited personal liability of its members. This structure protects the personal assets of the members from being used to satisfy business debts and liabilities. Therefore, if the LLC faces legal issues or financial difficulties, such as a lawsuit or bankruptcy, the members’ personal savings, homes, and other assets are typically shielded from the claims of the company's creditors. This limited liability feature is akin to that of a corporation, making LLCs an attractive option for business owners seeking to mitigate personal risk while enjoying the benefits of a more flexible operational structure compared to corporations.

The other choices reflect characteristics that do not align with the advantages of an LLC model. Double taxation on profits is typically seen in corporations, where the income is taxed at both the corporate level and again as dividends at the personal level. Full liability on business debts is contrary to the LLC concept, as it specifically aims to limit personal liability. Lastly, there are no restrictions on ownership in an LLC, which can have unlimited members and is not limited by the types of entities that can own interests in the company. Thus, the correct answer highlights a fundamental and significant advantage of forming an LLC.