More than 40 states have enacted statutes authorizing this form of legal entity. LLCs provide the liability protection afforded by corporations (i.e., unlike a partnership, principals are not personally liable for the debts and obligations of the organization) and offer the tax benefits afforded to partnerships (i.e., they avoid double taxation and permit allocation of taxable income and deductions). There are two key limitations associated with LLCs: they are available only for privately held companies, and the equity interest in an LLC is not freely transferable.