Tax
Single-Member LLC (SMLLC)
An LLC with one owner, legally a separate entity, but by default invisible for federal income tax ('disregarded entity').
A single-member LLC gives its owner state-law liability protection while requiring no separate federal income tax return by default. The IRS 'disregards' the entity: business activity is reported directly on the owner's Form 1040, typically on Schedule C (or Schedule E for rentals).
Disregarded status is only the default. An SMLLC can elect S-corp treatment (common once profits comfortably exceed a reasonable salary) or C-corp treatment. The legal wrapper stays the same; only the tax classification changes.
Even though the entity is invisible to the IRS, it is not invisible for other purposes: it needs its own bank account, may need its own EIN for payroll and excise taxes, files state LLC reports and franchise taxes (California's $800 minimum applies), and its liability shield depends on keeping business and personal finances genuinely separate.
Common pitfalls
- Commingling personal and business funds, the fastest way to let a creditor pierce the liability shield the LLC was formed to provide
- Assuming 'no separate tax return' means 'no compliance'; state franchise taxes, city licenses, and payroll accounts still apply
- Adding a second member casually; the entity silently becomes a partnership requiring Form 1065, often discovered a year late
Related service
See tax and CPA servicesHave a Single-Member LLC (SMLLC) situation in your business?
Federal, state, and local returns prepared and reviewed by a licensed CPA, with the planning done before year-end rather than after it.