Limited Liability Company Tax Issues
A limited liability company is formed by filing an articles of organization with the state.
For federal income tax purposes, a limited liabilitiy company is treated as follows:
Single Member Limited Liability Company-
By default, a single member limited liability company is a "disregarded entity" which means the sole member (owner) of the company is a self-employed independent contactors (who is subject to both federal income and self-employment tax) who files Schedule C Form 1040 to report the entity's income and expenses.
The owner of a single member limited liability company may elect to treat the company as either a Regular C Corporation or as an S Corporation, in which case the tax rules for these corporations will apply.
Multi-Member Limited Liability Company:
By default, a multi-member limited liability company (where there are two or more owners/members) is treated as a partnership which files a partnership federal income tax return.
The members of a multi-member limited liability company may elect to treat the company as either a Regular C Corporation or as an S Corporation, in which case the tax rules for these corporations will apply.
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