Which of the following is an advantage of forming a Limited Liability Company (LLC)?

Forming a Limited Liability Company (LLC) provides the significant advantage of limited liability for its managers and members. This means that the personal assets of the owners (members) are typically protected from the business's debts and liabilities. If the LLC faces a lawsuit or incurs debt, only the assets owned by the LLC are at risk, not the personal assets of its members. This protection encourages individuals to invest in or operate businesses without the fear of losing their personal wealth due to business-related issues.

The concept of limited liability is one of the primary reasons entrepreneurs choose to form an LLC rather than operate as a sole proprietor or partnership, where personal liability is a considerable risk. In contrast to the provided options, mandatory public disclosure of finances, unlimited documentation requirements, and advance IRS filings (which can apply to various business structures) do not characterize the major benefits associated with the formation of an LLC.