Single Member LLC

What is a single member LLC?

A single member LLC is a limited liability company with one owner. It provides liability protection while being simple to form and operate. For tax purposes, a single member LLC is a disregarded entity by default, meaning the IRS treats it as if it does not exist separately from its owner. Business income and expenses flow directly onto the owner's personal tax return on Schedule C.

Why professionals use single member LLCs

The LLC shields personal assets from most business liabilities, though not from professional malpractice. Formation is straightforward and inexpensive in most states. There are no partnership return requirements or corporate formalities. The owner has complete control without partners or shareholders. For solo practitioners or consultants, a single member LLC provides protection without complexity.

Tax elections for single member LLCs

While default treatment as a disregarded entity works for many, single member LLCs can elect corporate taxation. Electing S corporation status may reduce self-employment tax by splitting income between salary and distributions. This makes sense when income exceeds what a reasonable salary would require. Discuss with your accountant whether the tax savings justify the added compliance burden.