A business structure allowing limited liability while avoiding double taxation is known as?

The S-corporation is a unique business structure that allows owners to enjoy limited liability protection while also avoiding the issue of double taxation that is typically associated with traditional C-corporations. In an S-corporation, the income is not taxed at the corporate level. Instead, profits and losses are passed through to the shareholders' personal tax returns, similar to partnerships and sole proprietorships. This means that the income is only taxed once, at the individual level, thereby preventing the double taxation scenario where corporate earnings are taxed both at the corporate and shareholder levels.

This dual benefit of limited liability and single taxation makes S-corporations an attractive choice for many small business owners. Limited liability protects the personal assets of the shareholders from business debts and liabilities, which is crucial for financial security.

While LLCs also provide similar benefits of limited liability and pass-through taxation, they are governed by different rules and may have more flexibility in terms of ownership and management structures. However, the specific context of the question looks to identify the formal designation of an S-corporation as a business structure, which directly addresses the criteria mentioned.