Single-Member Limited Liability Company (SMLLC)
A single-member LLC is simply an LLC with one owner, who controls its financial interests and receives all profits. The LLC doesn’t have to file or pay corporate tax, saving you time and money by avoiding lengthy tax preparations.
Unlike a sole proprietorship or partnership, a single-member LLC can shield your personal assets from business debts and liabilities. If your company should go bankrupt, can’t pay its debts, or face a lawsuit, your personal assets may not be at risk.
Formation and Taxation
To set up an LLC, you’ll need to file Articles of Organization with your state’s government. But to set up a sole proprietorship, you don’t need to file any special paperwork. With pass-through taxation, profits and losses pass through to the owner, who then reports their income on their income tax return.
Disadvantages of a Single-Member LLC
What are the disadvantages of a single-member LLC?
A limited liability company (LLC) offers some liability protection by separating the business from the owner. For income tax purposes, an SMLLC is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation.
Benefits of a Single-Member LLC
Is there benefit to single-member LLC?
A single-member LLC is simply an LLC with one owner, who controls its financial interests and receives all profits. Unlike a sole proprietorship or partnership, a single-member LLC can shield your personal assets from business debts and liabilities. If your company should go bankrupt, can’t pay its debts, or face a lawsuit, your personal assets may not be at risk.
Ownership Structures
Limited liability companies (LLCs) can also choose to be treated as a corporation by the IRS, whether they have one or multiple owners. An LLC may be owned by one person or many. Owners of a multi-member LLC can manage themselves as a group or establish a single manager to govern.
A single-member LLC is simply a limited liability company with one member that also happens to be the owner of the business. Multi-member LLCs are owned by two or more people who have an equal right to participate in management decisions.