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All About the Single-Member Limited Liability Company (SMLLC)

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The single-member limited liability company (SMLLC) is a very common form of business ownership for a solo business owner. Learn how to start a single-member LLC, how a single-member LLC pays taxes, and why a single-member LLC is considered a disregarded entity.

1. What is a Single-Member LLC?

A single-member limited liability company (LLC) is an LLC with one member.  The SMLLC is formed under state laws and regulations and it pays taxes as a sole proprietorship. 

2. How Do I Start a Single-Member LLC?

Forming a single-member LLC is relatively simple.  You will need to get information from your state department of state (business division) to learn the state requirements for LLC formation. You will need to obtain a format for the Articles of Organization (or Certificate of Organization in a few states) and send in the required payment.  Then you need to construct an operating agreement (See below for more information on why single-member LLC's need an operating agreement. 

3. How Does a Single-Member LLC Pay Taxes?

A single-member LLC pays income taxes, sales taxes, property taxes, self-employment taxes, employment taxes, and other taxes.  Read more about the types of taxes paid by a single-member LLC.

4. How Does a Single-Member LLC Pay Income Taxes?

A single-member LLC pays income tax as a sole proprietor.  That is, the business taxes are filed using Schedule C and the net income of the business is incorporated into the owner's personal tax return (Form 1040). The above article provides details on how to complete Schedule C.

5. Why is a Single-Member LLC a Disregarded Entity? What Does This Mean?

A single-member LLC is the most common type of disregarded entity.  A disregarded entity is a business that is disregarded from its owner for tax purposes, but it still retains liability protection.  Tax and liability issues relating to the disregarded entity are explained in this article.

6. Does a Single-Member LLC Need an Operating Agreement?

Every business entity needs some kind of legal document to set out "what happens when" scenarios and how they will be handled.  A single-member LLC needs an operating agreement for several reasons, including a determination of what will happen if something happens to the member.

7. How Does a Single-Member LLC Pay Employment Taxes?

The IRS says that a single-member LLC is "disregarded from its owner for tax purposes."  But what about employment taxes? To clarify the issue, the IRS says that the single-member LLC pays the employment taxes.  But there is more to it than that....Read this article to find out.

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