Frequently Asked Questions

What is the difference between a single-member LLC and a multi-member LLC?

The difference between a single-member LLC and a multi-member LLC primarily lies in the number of members or owners and the way they are taxed. A single-member LLC, as the name suggests, has only one member or owner. On the other hand, a multi-member LLC can have multiple members or owners, with no upper limit, except in the case of an LLC taxed as an S-corporation, which can have no more than 100 shareholders at any given time. In terms of taxation, a single-member LLC is considered a "disregarded entity" by the IRS and is taxed similarly to a sole proprietorship. The income and expenses of the business are reported on the owner's personal tax return. Conversely, a multi-member LLC is taxed as a partnership by default. The LLC itself does not pay taxes. Instead, each member reports their share of the business income or loss on their personal tax return.