What Tax Options Does an LLC Have? Single-member LLCs Filing as a Sole Proprietorshipīy default, the Internal Revenue Service (IRS) classifies a single-member LLC as a disregarded entity, which means the Limited Liability Company files taxes as a Sole Proprietorship. When there is more than one owner, it is called a multi-member LLC, which can file taxes as a:Įach tax election determines how you pay yourself from your LLC. Whether or not the owner is on payroll depends on how you decide to file.Ī sole LLC business owner is called single-member LLCs and can file taxes as a:
If you’re thinking about starting an LLC, you have several options for how you want to organize your company regarding paying taxes. In fact, tax flexibility is one of the reasons the LLC is such an appealing option for small business owners. The Limited Liability Company (LLC) is a popular legal entity offering liability protection to its owners (called members), simple compliance requirements, and tax flexibility. As a small business owner, how you pay yourself depends on your business’s legal structure and how you elect to pay taxes.
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