Which statement is true regarding a limited liability company (LLC)?

A limited liability company (LLC) is specifically designed to limit the personal liability of its members, which is a core feature of this type of business structure. When an LLC is established, the personal assets of its members—such as personal bank accounts, homes, and other properties—are generally protected from being used to satisfy the company's debts or liabilities. This is one of the primary advantages of forming an LLC, as it provides a shield against personal financial risk.

The incorrect options highlight misunderstandings about LLCs. For instance, stating that members are personally liable for debts contradicts the fundamental purpose of an LLC. Additionally, forming an LLC typically involves filing articles of organization, not articles of incorporation, which are more associated with corporations. The assertion that an LLC cannot be classified for federal tax purposes is also inaccurate; in fact, LLCs can choose how they want to be taxed, either as a sole proprietorship, partnership, or corporation depending on the number of members and their preferences. Thus, recognizing that members enjoy limited liability is crucial for understanding the benefits and protections LLCs provide.