limited liability companyn.
Reviewed by Owen Hathaway, AttorneyUpdated June 1, 2026A business structure that shields its owners' personal assets from the company's debts and lawsuits, while staying simpler and more flexible to run than a corporation.
A limited liability company is a statutory business entity that pairs the liability shield of a corporation with the pass-through taxation and operational flexibility of a partnership. Its owners are called members, and their personal assets are generally insulated from the company's debts — a creditor of the business reaches the business, not the members' homes and savings.
An LLC comes into existence when articles of organization are filed with the state, and its internal governance lives in a contract called the operating agreement. By default the IRS does not tax the LLC as a separate entity — a single-member LLC is disregarded and a multi-member LLC is taxed as a partnership — though the members may elect corporate or S-corporation treatment.
Colorado governs LLCs under the Colorado Limited Liability Company Act (C.R.S. Title 7, Article 80), not a uniform act; its charging-order provision sits at C.R.S. § 7-80-703. Charging-order protection, which confines a member's personal creditor to distributions rather than to the business itself, is strongest for multi-member LLCs and markedly weaker for single-member LLCs: in In re Albright, 291 B.R. 538 (Bankr. D. Colo. 2003), the Chapter 7 trustee of a bankrupt sole member took over the LLC as substituted member and forced a sale, because with no other members there was no one the charging-order rule needed to protect. Wyoming enacted the first U.S. LLC statute in 1977 and governs LLCs under its own Wyoming Limited Liability Company Act (Wyo. Stat. Title 17, Chapter 29), substantially revised in 2010 along uniform-act lines.