LLC's are the predominate form of Business!
Forming a business as a Limited Liability Company has all the liability limitation advantages of a corporation and all of the tax advantages of a proprietorship or partnership. Only in rare circumstances should a new business be started as a sole proprietorship, partnership or S corporation. The LLC serves most new and growing business well.

Fundamental Tax Advantages
The essential advantage of a limited liability company is that it provides pass-through treatment without taxation at the entity level, essentially partnership tax treatment, while shielding members from personal liability. Multiple member LLC's are treated as a partnership and file a US Partnership Tax Return Form 1065. Single Member LLC's can be treated as a Sole Proprietorship and are taxed on the member's 1040 Schedule C. Limited liability companies then provide the advantage of protecting its members from the liabilities of debts and obligations, similar to corporate shareholders. It should be noted, however, that this limited liability has been continuously eaten away, particularly in the area of environmental law, and it is not expected that limited liability companies would fare any better. If a limited liability company is properly structured, it will be treated as a partnership pass-through entity.

General Tax Classifications
Because a limited liability company is an unincorporated business entity, the Internal Revenue Service will not treat it as a corporation unless it has more corporate characteristics than non-corporate characteristics. The Entity Classification Election filed with the IRS can specify whether the LLC will be treated as a Corporation, Partnership or Proprietorship. Your tax attorney will prepare and file this selection with the IRS when your LLC is formed.

More Information On LLC's
Limited Liability Company Taxation
Single Member LLCs
Comparison of LLC's to Corporations
Businesses Suitable for LLC's
NJ Limited Liability Company Formation