LLCs can limit liability without stunting benefits. (limited liability companies)

Riddle of the day: What do you get when you cross a corporation and a partnership? Answer: A limited liability company.

No joking: This form of business limits members' liability for debts and lawsuits like a corporation does and, at the same time, gives them the tax advantages of a partnership.

Although rules governing liability vary from state to state, LLCs generally offer more protection than partnerships and sole proprietorships. Unlike in partnerships, all members can be actively involved in managing the company without risking personal liability.

Jeff Hotek, a partner at Bethesda-based accounting firm Grossberg Co. LLP, gives two examples of why a new …