The limited liability company (or "LLC") is a business entity first created in 1977 that combines features of corporations and partnerships. The LLC is not a corporation, but provides limited liability to all of its owners (called "members") for the debts of the LLC. The LLC is not a partnership, but allows members to manage the company directly and can be taxed as a pass-through entiy as in a general partnership. The LLC is formed by a filing with a state administrative agency, but is otherwise almost completely governed by a contract among the members, called the operating agreement.
The LLC has become the most widespread business form over the last decade or so, as documented in this post. The combination of limited liability, pass-through taxation, and flexibility in management has proven very appealing to entrepreneurs. Indeed, there are few disadvantages to organizing as a LLC, but companies that are expecting to go public or to receive venture capital financing still often organize as corporations.