What is a Multi-Member LLC (MMLLC)?

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A Multi-Member LLC is abbreviated MMLLC and is the term used for an LLC that has 2 or more Members (owners). There are no limits* to the number of Members a Multi-Member LLC can have and the LLC Members can be individual people, or they can be companies (like another Corporation or LLC).

The purpose of starting a Multi-Member LLC is protect the personal assets of the Members. LLCs – Limited Liability Companies – do just that; they limit the amount of liability the owners would be exposed to in the event of a lawsuit.

The most popular forms of Multi-Member LLC are husband and wife LLCs and friend’s/business partner LLCs. Multi-Member LLCs are allowed in all 50 states.

Multi-Member LLCs can be formed by both US citizens, as well as non-US citizens and non-US residents*. The same goes for Single-Member LLCs.

*If a Multi-Member LLC elects to be taxed as an S-Corp with the IRS, the number of owners (called “shareholders”) cannot be more than 100. Additionally, S-Corp shareholders (LLC Members) cannot be non-resident aliens.

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Taxes & Multi-Member LLCs

For federal tax purposes, the IRS taxes a Multi-Member LLC like a Partnership.

For this type of taxation, the Multi-Member LLC will file Form 1065 (“Partnership Return”) with the IRS. This is an informational return. Also, whoever prepares the taxes for the Multi-Member LLC will also issue K-1s to the LLC Members. The K-1 then become a part of each Member’s personal 1040 personal income return. The K-1 reports the income (or loss) that each Member made (or lost) from the LLC.

Please note that we said “taxes a Multi-Member LLC like a Partnership“. This terminology regarding LLCs and taxation can get a little bit confusing as sometimes people think that their LLC is a Partnership.

Legally, your LLC is not a Partnership (it’s just treated this way for tax purposes). You LLC is a legal business entity – (separate from yourself) that is created by state law. The IRS does not have a specific tax classification for LLCs, so instead, the IRS taxes the Multi-Member LLC just like a Partnership (since there are multiple owners).

If instead, you’d like your Multi-Member LLC to be taxed as an S-Corp, you can complete Form 2553 and submit this to the IRS. Alternatively, you can also have your LLC taxed as a C-Corp by completing Form 8832 and submitting it to the IRS. Either way, we strongly recommend that you speak with a few accountants to get a few different perspective on which form of taxation is best for your LLC and your situation. We see far too many people file forms with the IRS without understanding the full ramification, and pros and cons for their business.

How to pay yourself in a Multi-Member LLC?

In a Multi-Member LLC, in order to pay the members, you will simply take what are called “capital distributions”. This is a withdrawal made from the LLC Bank account to each individual Member in proportion to their membership interest (how much they own).

After forming your LLC and opening your LLC’s bank account, each Member will make a “capital contribution” to the LLC, also in proportion to their membership interest.

If your LLC will be taxed as an S-Corp by the IRS, then each Member will need to take a reasonable salary, pay payroll taxes on such salary, and the LLC will need to file a corporate tax return, called 1120S, with the IRS each year.

Can I get an EIN for a Multi-Member LLC?

Yes, of course. A Multi-Member LLC can obtain a Federal Tax ID Number, also known as an EIN (Employer Identification Number) from the IRS after the LLC is approved by the state.

An EIN will be used for opening your business bank account, filing taxes, handling employee payroll (if applicable), and obtaining certain business licenses and permits.

An EIN for your LLC is free and can be obtained from the IRS online in about 10 to 15 minutes.

How to Form a Multi-Member LLC?

In order to form a Multi-Member LLC you must file what are called the “Articles of Organization” (or a similar document, such as a “Certificate of Formation” or “Certificate of Organization”, depending on the state) with the Secretary of State’s Office.

You must file your LLC’s Articles of Organization (or similar forms) with the Secretary of State located in the same state in which you wish to conduct business. For example, if you’re forming an LLC in New Mexico, you must file your LLC’s Articles of Organization with the New Mexico Secretary of State.

You can file your Multi-Member LLC yourself by following our free DIY LLC Guides, which are available in all 50 states. Or if you’d like to get a better understanding on LLCs first, please see the videos and articles located in our LLC Learning Center.

Matt Horwitz
Founder & Educator, LLC University®
Forming an LLC shouldn't be so complicated. Our step-by-step guide will make the process a breeze – and no complex legal jargon! LLC University® teaches people how to form an LLC for free in all 50 states. We hope you find our free guides and resources helpful in your business journey.
Leave a Comment (69) ↓
Disclaimer: Nothing on this page shall be interpreted as legal or tax advice. Rules and regulations vary by location. They also change over time and are specific to your situation. Furthermore, this comment section is provided so people can share their thoughts and experience. Please consult a licensed professional if you have legal or tax questions.


  1. is June 19, 2017

    is it better to make a multi member llc or change of ownership ?
    do i need a new ein or i could use the current? thank for all the info.
    please previde links thanks

    • Matt Horwitz June 20, 2017

      You can either form a new multi-member LLC or amend your existing LLC, amend the Operating Agreement, sign a resolution, and mail a letter to the IRS about the tax classification change. If you’re doing this yourself, it’ll be a little easier to form a new LLC.

  2. Modia Ra October 9, 2017

    This is an excellent article. Thank you for posting!

    • Matt Horwitz October 10, 2017

      You’re welcome Modia!

      • Mike Smith January 19, 2018

        If six people form an LLC are they actually shareholders? Lets say we make 100k in profit. Two of the six want out of the LLC are they owed anything? How does it work in terms of company worth and or return on investment?

        • Matt Horwitz January 19, 2018

          Hi Mike, no the 6 people would not be referred to as shareholders. That terminology is used for Corporations. They would be considered LLC Members. LLC Members are the same thing as LLC owners. With this many members, you’ll want a customized Operating Agreement drafted by a lawyer, this way, if 2 of the 6 members leave, there is an already agreed upon arrangement in place. Typically there is a price involved which is used as legal consideration so the exiting members can transfer their LLC interest to the remaining members. In terms of company worth and return on investment, I’m not sure what you’re asking. Feel free to rephrase that part of your question.

  3. Amelia December 18, 2017

    Hi Matt,
    I’m part of a 2 member LLC but I will be leaving the LLC to take care of my family, leaving it to become a single member LLC. Do you know if the remaining member will need to get a new EIN in this situation or can he keep the EIN and just let the IRS know it’s now a single member LLC? I’m reading conflicting information online and from the IRS about this. Thanks in advance!

    • Matt Horwitz December 22, 2017

      Hi Amelia, do you know who is listed as the Responsible Party? You can find this on your EIN Confirmation Letter. You’ll want to write a letter to the IRS letting them know that the number of members in your LLC has changed from 2 to 1 and your LLC Partnership has terminated, but the LLC will continue to operate as a single-member LLC taxed as a Sole Proprietorship. In the eyes of the IRS, it’s like your Partnership closed and now a Sole Proprietorship opened.

      • Amelia February 1, 2018

        Hi Matt,

        Sorry for the delayed response – just saw your reply. Thank you for your response.

        I am the Responsible Party listed with the IRS. We’ll issue a letter to the IRS to notify them of the changed and also change the responsible party. One issue is that the other LLC member is a foreigner and doesn’t have a SSN or ITIN. Will he need at least an ITIN to take over the LLC once the partnership is dissolved?

        And just to clarify, he could keep the current EIN as a single member LLC taxed as a sole proprietorship?

        Thank you for help!

        • Matt Horwitz February 3, 2018

          Hi Amelia, in this case, it’s best to cancel the EIN since it’s connected to you. Your partner can obtain a new EIN (without needing an SSN or ITIN) by submitting Form SS-4 by mail or by fax (he won’t be able to do online). On line 7b where it asks for “SSN, ITIN, EIN”, just write “Foreign”. Hope that helps.

  4. Mike Smith January 19, 2018

    We have a group of six individuals that will be paying monthly dues to an account. These six people will also have a business that is for profit. Would a multi member LLC be for the entire group including monthly dues or would it be only the for profit aspect?

    • Matt Horwitz January 19, 2018

      Hi Mike, when you say monthly due, what type of monthly dues are you talking about? A monthly number that you came up with? If so, what’s it paying for? And I don’t understand your last question about a MMLLC being for the whole group. Can you please rephrase?

  5. Emily February 15, 2018

    Hi Matt, your resources are very helpful – thank you! I’m looking to form an LLC with one other person as an equal partnership, but I don’t see any place on the NYC LLC online form to enter multiple members’ names and addresses – only the person filling it out. Should there be a way to enter both of our names & addresses as owners/members when we file for the LLC, or is it ok if only one person’s name is on it and we then use the Operating Agreement to list out the members and percentages?

    • Matt Horwitz February 21, 2018

      Hi Emily, you’re very welcome! Thanks for the nice comment :) New York (along with most states) actually doesn’t want to (or need to) know who the LLC Members are, since this is an “internal affair”. The person listed at the bottom of the Articles of Organization is simply the LLC Organizer, the person completing and submitting the form. So the person on the form (although it’s probably you) isn’t technically an LLC Member until you sign the LLC Operating Agreement. Having said that, you can also have the LLC Organizer sign a Statement of LLC Organizer, which appoints the LLC Members. The Statement of LLC Organizer along with the LLC Operating Agreement create a very nice and organized paper trail. Hope that helps!

  6. Ashe February 28, 2018

    It took me a lot of sifting through websites to finally come across yours.

    Multiple articles I found searching for different subjects within LLC creation have been the best.

    Your site is helpful, and you have already won me over as trustworthy in my eyes after tediously looking for answers to these questions.

    If there is some way I can recommend your website or help your SEO so you appear more predominantly in the search results please let me know how. Otherwise thank you very much for your concept of llc university. There is not much definitive information on the topic and I salute you for focusing on bringing this content to entrepreneurs.

    Thank you.


    • Matt Horwitz February 28, 2018

      Hey Ashe, I’m not sure if this is a pitch/promotional comment to offer your services (if it is, it’s the smoothest I’ve ever seen ;)… or it’s just a genuine comment. Either way, I hope our site has been helpful. We’re not worried about SEO. We’re focused on being the most helpful and providing the best information. The “SEO” will take care of itself. As time goes on, less people will have to do the sifting you did to find us. So thanks for your “digging” to land here :)

      • Ashe February 28, 2018


        Nope, just a big thank you!

        I will continue to recommend your service to any followers.

        We are doing FBA and I’m sure many more will be to follow.

        You may like to write an article specific to FBA and others looking specifically to get into online business who do not understand if they should file in their own state or another.

        I found after my own research, the most direct method for starters is filing in your own state so that you can be your own agent and saves you the step of finding someone else to act as your agent in another state. I found multiple accounts of people saying that most people starting an LLC for online business won’t be doing enough in sales for it to make the difference and that later once business picks up you can decide how, when and if you want to incorporate.

        The next thing I’ll be researching is how we should be filing as a multi member llc and if s-corp or c-corp is right for us.

        Good luck with your endeavors!


        • Matt Horwitz March 2, 2018

          You’re super awesome Ashe! Thank you!! We have FBA on our list… just a handful of things in front of it ;) We’ll soon provide more specific articles for people in FBA as well as other forms of eCommerce. And great points on the best “starter pack” for most people. We couldn’t agree more! Which state are you filing in? In most states, whether Single-member or Multi-member, the Articles of Organization (or similar document) is still the same. Regarding S-Corp taxation (which may make sense after net income is above a certain level), please see: LLC taxed as S-Corporation. For C-Corp taxation, please see: LLC taxed as C-Corp.

  7. sonia March 6, 2018

    I have formed a multi member llc. There are 4 household members, 2 households are husband and wife and the other two are individuals. For obtaining EIN on IRS.gov, there is a question that asks how many members are in LLC. Will it be 4 members (4 households) or 6 members.

    • Matt Horwitz March 10, 2018

      Hi Sonia, I’m not really sure what you mean by “households” in this context. However many individual people are members of the LLC is what should be listed in the EIN application though. Hope that helps.

      • Britani January 10, 2019

        I have 2 members of my LLC. On the IRS website I was applying for the LLC EIN and then after entering 2 on the members list, the IRS page suggested that I apply for the Partnership EIN. Should I apply for EIN Partnership or EIN LLC?

        • Matt Horwitz January 10, 2019

          Hi Britani, by default, an LLC with 2 or more members is taxed like a Partnership (unless you elect to be taxed like an S-Corp or C-Corp). Check out how are LLCs taxed for more info. Hope that helps.

  8. Kevin April 10, 2018

    Thanks for the guidance and concise info Matt. Two questions:
    1) Is there any additional liability benefit to forming a new multi-member LLC with a single member LLC as one of the members, rather than an individual? I have existing LLC that I use for other services and am forming a new company with other partners.
    2) Can multi-member llc’s be amended in future to include additional members and change % of ownership? I saw your comment about shares and equity and want to know if there is a way to use LLC rather than forming a corporation.

    Thanks for the info!

    • Matt Horwitz April 11, 2018

      Hey Kevin, you’re very welcome. 1) There may be additional liability protection by the LLC member being another LLC, however, this is not something we’ve researched or covered yet, so cannot provide any details. We recommend speaking a business lawyer regarding that. 2) Yes, the LLC Members can be changed and the percentages of ownership can change as well, via an amended Operating Agreement and supporting documentation, such as resolutions and agreements. We also advise getting assistance from a lawyer on this as well as this is not something we recommend DIY’ing. Apologies for the lack of specificity. And thanks for your understanding.

  9. SHEVAN WILKS April 10, 2018

    why am I not seeing my EIN for my LLC on sunbiz.org?

    • Matt Horwitz April 11, 2018

      Hey Shevan, I imagine you’re thinking that after you form your LLC in Florida and then get an EIN from the IRS, that it will then show up on Sunbiz, correct? If so, that’s not how it works. The IRS does not contact the Florida Department of State and provide them with your EIN. You can give the state your EIN when you file your Annual Report. And then it’ll show up on your LLC’s record. Also keep in mind that you’re not required to disclose your EIN to the Florida Department of State, however, something does need to be entered into the field. Filers who’d rather not disclose the EIN on state records enter “Applied for” or “None”. Hope that helps.

  10. Stanley April 12, 2018

    A 2 member Delaware LLC, with both members being non-us citizens and non-us residents, generates income from outside the US. How will the LLC and the 2 members be taxed?

    • Matt Horwitz April 14, 2018

      Hey Stanley, the LLC will be taxed as a Partnership for US tax purposes. The details of how and where to file should be discussed with an accountant who specializes in US taxes for foreigners. Hope that helps.

  11. Sam A. April 26, 2018

    Hi Matt, I came stumbled across your web site and I’m eating it up! :) Absolutely love it and thank you soooo much for this invaluable information, all in one place.

    • Matt Horwitz April 29, 2018

      Dude, thanks for the rockin’ comment! So glad to hear you’re enjoying the site. It’s taken a long time and a lot of work, so it’s always great to know that we’re helping. Thanks again :)

  12. Katty Fernandez June 2, 2018

    I’m planning to do a LLC with a foreign individual (NO ITIN/SSN).
    What is the best option to be treated as S-Corp. Can we do?
    – 2 LLCs. 1er member-LLC (US citizen) and 2nd memeber-LLC(foreign) (LLC)…or

    -1er member as individual (US citizen) and 2nd member as LLC (foreign individual)

    Do you think that is posible?
    Thanks for your help

  13. CJ June 5, 2018

    So, for the past 2 yrs I have owned a business in Florida which I now plan to bring someone else on board. I currently have an LLC for a skincare related business, and now am going mobile and need to add an additional member, who I chose as my business partner, into the LLC. Trouble is, I don’t know how to update my current LLC to add this person, and I also am not comfortable making this person 50% in this business seeing I am the one who created it, has been working it, and who is way more knowledgeable about it. This is a business that I started in NY 4yrs ago and brought to Florida, and have been operating under its name for almost 2yrs. I have no problem bringing this person on board but I refuse to let this business plan and idea somehow slip out of my hands in case this person and I were to ever have a falling out. How do I change my current LLC to a MMLLC with also doing the percentage thing as to not make someone get hard feelings about the situation? For some reason, no one seems to understand what I’m asking, and maybe that’s because I have no idea how this stuff works lol! Any help with this would be greatly appreciated!
    Thank you!!

    • Matt Horwitz June 17, 2018

      Hi CJ, I’d say more importantly, you sound very hesitant about taking on a business partner. It’s a whole different ball game than running things yourself and you’re right, things could go sour. However, if things go sour in a 2-Member LLC, you just can’t kick that person out. You’re stuck with them until you make an agreement. I’d also recommend consider other options of working together, like just paying them as an independent contractor based on a percentage of sales, etc. If you do want to add them as an LLC Member and retain control, you’ll want to have your LLC be Manager-Managed. You’d be the Manager, and both of you would be owners. You’ll then need to amend your Articles of Organization, amend the Operating Agreement, and then update the IRS and let them know the LLC will now be taxed as a Partnership. Hope that helps.

  14. Ray Mo June 20, 2018

    Hi Matt,

    Great info for many of us!
    What are the reporting requirements for a Foreign Owned Entity who is a member in a multi-member US LLC?
    Will it be only for the entity K-1 income only or is there additional
    reporting for the individual owners of the foreign owned entity?

    • Matt Horwitz July 30, 2018

      Thanks Ray! The LLC needs to file Form 1065 and issue K-1s to the Members. If needed, you’ll also apply for an ITIN. We don’t cover taxes for non-US residents yet (plan to in the future), so you’ll need to speak with an accountant. I would ask about the following: US Nonresident Alien Income Tax Return (1040NR/1040NR-EZ), Sales tax and/or excise tax, Conduct of a U.S. trade or business (USTB), Effectively Connected Income (ECI), Fixed, Determinable, Annual, Periodic Income (FDAP), and Federal Withholding Tax for Foreign Nationals. Hope that helps.

  15. Chris B July 27, 2018

    I have formed an IL single member LLC. I have someone who wishes to be a partner/shareholder. I want to make this person a 20% share/ownership in the company. How can this be done if my current LLC is a single member LLC? Thanks

    • Matt Horwitz August 14, 2018

      Hey Chris, you’ll want to review your Operating Agreement to check procedure for adding an LLC Member. Usually it goes as follows: review Operating Agreement, prepare Assignment of Membership Interest Agreement, amend Operating Agreement, amend Articles of Organization (if applicable), notify IRS if change in tax classification (in your case, LLC is going from Sole Proprietorship taxation to Partnership taxation), update state Department of Revenue, and update bank. Hope that helps.

  16. Mo August 10, 2018


    Found you on Youtube and love what you’re doing! I had to subscribe! I have a question. I’m trying to form a multi member LLC in the state of Georgia for Real Estate. I want to use another company(a Corp) I’ve created as the other member of a two-member LLC, besides myself. This is more for asset protection reasons. How do I go about doing so on any applicable state paperwork? Do you have any advice for or against doing this? Do I have to alot a percentage of the new LLC to my Corporation and if so what percentage do you recommend? Does it matter if this Corporation is not involved in real estate? Does it matter that this Corporation was formed in another state and that the annual paperwork for it may not be up to date?

    Thank you!

    • Matt Horwitz August 16, 2018

      Hey Mo! Thanks so much! Since the Georgia LLC Articles of Organization doesn’t ask for Member’s info, there is nothing listed with the state that shows ownership. You’re basically just listing the LLC name, the Registered Agent, and the LLC Organizer in the Articles of Organization. The Member’s info will be listed in your LLC’s Operating Agreement (you + the Corporation). We also recommend that you as the Organizer sign a Statement of LLC Organizer appointing both the Members. It “connects the dots” between the Articles of Organization and the Operating Agreement. It’s not required, however, it creates a nice internal paper trail.

      Regarding your other questions, these should really be posed to an attorney. There’s a lot of nuance and details to something like this. However, a common setup is that the Corporation owns 2% of the LLC. No, the Corporation doesn’t have to involved in real estate. It doesn’t matter what state the Corporation was formed in. I’m not sure about the Annual Reports that aren’t filed, however, if the LLC were to be administratively dissolved (for failure to file the Annual Report), and you were to end up in court, that could be an interesting predicament. Don’t know much about it, but it sounds risky.

      Hope that helps! And feel free to follow back up with any details or learnings you come across. Cheers.

      • Mo August 24, 2018

        Gotta thank you for incredible info Matt! You rock!

        • Matt Horwitz August 31, 2018

          You’re very welcome! Thanks Mo!

  17. Allan Ugarte August 18, 2018

    Great article and the information is priceless. I love websites like this!
    I want to form an LLC for my dropshipping business in Texas. I had 2 people help me, but now that the work is done I dont need to hire them as employees (plus I want them to start their own business to gain experience and be entrepreneurs). I would like to equal distribute the profits 33% each is that even a thing? If so do I file as a mulitmember Llc or a single? And how often can i distribute profits? Who could I go to answer more questions?

    Thank you for your time.

    • Matt Horwitz August 19, 2018

      Hey Allan, thanks so much! Why make them a Member of the LLC just because you want to pay them? Doesn’t sound necessary to me, based on what you’ve shared. An LLC Member, by default, is not just entitled to profits, but also runs the business, binds the LLC into contracts and agreements, and much more. Doesn’t sound like you want to give that type of control. Why not simply have an agreement where “Allan’s Company LLC” agrees to pay 33% of revenue/profits (research pros and cons of paying out based on top line revenue vs. bottom line profit) to John Doe. Hope that helps.

  18. Patricia Hong August 30, 2018

    I belong to a LLC for rental property. It’s my father in law who owns 60% and than my I husband and I own 20% each. My father in law put up the money and my husband and I rehab them that was the deal. When property is sold father in law gets the money he paid plus 60% of profits. He also lives off the income from the rentals. My husband and I received no income
    The question is I am divorcing my husband and not sure what happens to my 20%.
    Ant info would be great. Thanks

    • Matt Horwitz October 12, 2018

      Hi Patricia, since it’s likely that a provision for this isn’t in your Operating Agreement, it would depend on the agreements you reach in your divorce settlement. Are you working with an attorney and have they recommended anything?

  19. mitchy August 30, 2018

    i formed an llc with both my husband and i as members. in getting an ein, i see we will be taxed as a partnership(multi member llc). am wondering if it would be better to be taxed as a single member llc. cos i would basically be the one running the business. he works fulltime at his job.
    and if its better to be taxed as a single member llc, can i make a change in the filing with the state?

    • Matt Horwitz October 12, 2018

      Hey Mitchy, is your husband actually a part of the business and is it really a Multi-Member LLC? If so, then you can’t choose to be taxed as a Sole Proprietorship if there are 2 Members, unless you were in a community property state (see here: husband and wife qualified joint venture LLC). However, if you just want to own the business 100%, and you listed both you and he as Members, then you can file an Amendment (usually referred to as an Amendment to Articles of Organization, however, the form has different names depending on the state). Additionally, rather than sending a letter to the IRS and requesting them to update your EIN, it’s easier to cancel the EIN, then get a new one, listing the appropriate number of Members. Hope that helps.

  20. Jay December 14, 2018

    Hey Matt,

    Love what you have going here. Many thanks.

    I have recently sent in my Articles of Amendments to change my business name and to remove a member (my mother) at her choice. The company was a partnership LLC that was managed by 2 Managers (Me and my mom). I am bringing in a new recruit to join my new business but would like to remain some kind of control.

    Can an LLC be managed by ONE manager but has an additional member and still be considered as a multi-member LLC? Or is this a single-member LLC? I need to know if I would still be considered multi-member LLC because otherwise, I would need to apply for a new EIN.

    Pretty much to sum, can I be the sole manager, and have the other guy as a member, and the company still be considered as a multi-member LLC? Since a manager can also be a member? Also, do managers have more control over the company than members?

    Thanks Matt, and sorry for not being able to keep my questions concise.

    • Matt Horwitz December 18, 2018

      Hi Jay, regarding control, it depends on what’s spelled out in the Operating Agreement. The Members (you) appoint the Managers and then the Managers can exercise the rights they have, again, as per the Operating Agreement. You asked, “Can I be the sole Manager, and have the other guy as a Member, and the company still be considered as a Multi-Member LLC?” The answer depends on whether or not you also want to be a Member, which I’m assuming is yes (then it would be a Multi-Member LLC). If you and your new “recruit” are both Members, but you’re the sole Manager, then the company is a Multi-Member LLC. If you want to be the only Member and have this guy as the only Manager (who is a non Member), then it’s Single-Member LLC. It sounds like you don’t want this guy to be either a Member or Manager, so why do it? Meaning, you used the word “new recruit”. That doesn’t sound like someone you’d want to make a business partner (LLC Member) or LLC Manager. Why not just bring this person on as an independent contractor and leave them out of your LLC ownership and management. Something to consider. Hope that helps.

  21. Jess December 31, 2018

    Hi there,
    I have a group of 3-4 families and we want to buy a vacation property together. It seems like creating a MMLLC might be the legal structure for such an enterprise. We would like to use the property ourselves, and potentially rent it out as well. We are only in the beginning stages of discussion, and I will talk to a banker soon too about financing. Do you know anything about all this, and would a MMLLC be able to secure a mortgage?

    • Matt Horwitz January 6, 2019

      Hi Jess, it all depends on the bank. Things vary widely. Usually you can get a loan to an LLC, you just have to call around and speak to different banks. Try local, smaller, and community banks. Often, these loans fall under the “commercial lending” division, even though the property is zoned residential. Hope that helps.

  22. Nancy January 8, 2019

    2 sons formed an local and have an ein number, everything is split 50/50 profits, expenses etc, how do we file taxes…first year…open only 4 months…THANK-YOU

    • Matt Horwitz January 8, 2019

      Hi Nancy, you’ll want to speak to an accountant about that. Hope that helps.

  23. Omar January 16, 2019

    Hi Matt,

    Thanks for providing such comprehensive and well written articles. Very few things make for convoluted reading than taxes and accounting, but somehow you manage to make the information relatively easy to understand for us mere mortals. We really appreciate it.

    My wife and I started an LLC (50/50 ownership) and are debating whether it’d be worth taking on the S-Corp tax classification. I read your article on the perils and opportunities of the S-Corp tax (payroll and administrative cost vs. tax savings) and it seems like the way to go in our case.

    Ours is a budding consulting firm (less than 6 months) that is yet to generate any revenue, but has incurred some tightly managed expenses. My wife continues to work full time while I throw myself into the business and we plan to file taxes jointly. If we optimistically anticipate $100,000 in revenue for the year and most of it is distributed as my salary, would it still make sense to go the S-Corp route? We expect revenue to gradually increase to $500,000 over the next 3-4 years. Also, considering that we’re late in filing Form 2553, in the case of the 2018 tax year where we only have expenses and $0 revenue, would it make sense to attempt to get the S-Corp classification to include 2018 (before the tax filing due date in April)?

    I understand that we should probably talk to an accountant, but would appreciate it if you’d throw us a hint in the meantime.

    Thanks again for the cool site,


    • Matt Horwitz January 16, 2019

      Hey Omar, thank you! We work hard to make things easy ;)

      While you may earn $100k in revenue, you want to look at net income (after expenses). It doesn’t seem like electing to be taxed as an S-Corp for 2018 is necessary as there was no net income. While you certainly can, it’ll just increase your administrative costs. However — and here’s our necessary disclaimer — whether one should or shouldn’t pursue the LLC/S-Corp route is a conversation best had with an accountant. While we covered a lot of specifics in the article, there are more details and nuances to dive into that’ll be specific to your situation. Hope that helps!

  24. Greg January 28, 2019

    Very helpful article Matt!

    My friend and I have a YouTube channel that we recently monetized. We have decided to start an LLC to protect our personal assets. I’m confused on if I should start a single-member LLC (is that possible with two people?) or a multi-member LLC. We both have full time jobs where we are paid fairly well so we plan on re-investing all of the YouTube money back into the brand and taking none for profit. Thanks!

    • Matt Horwitz February 6, 2019

      Hey Greg, two people can’t form a Single-Member LLC. Well, technically, a husband and wife who file jointly and live in a community property state can form a Single-Member LLC (called a Qualified Joint Venture LLC with the IRS)… but I don’t think you fall into that category ;) So in your case, it’d be a Multi-Member LLC. Hope that helps :)

  25. David February 12, 2019

    My wife and I are about to open a LLC in Oklahoma. I want to get this business started at a slow rate this year to be sure we have accounted for as many of the variables as possible. Next year I retire from a federal job and will receive a social security supplement to fill the gap until I turn 62. I have learned if I exceed approximately 1400 a month my supplement will start being reduced. My first thought was to have it a SMLLC with me being an employee earning a percentage of the monthly gross of the business. I will need to be able to represent the company for responsibility of items picked up and delivered. This will create a payroll for us both but at different percentages. I have also thought about us being partners and with the operating agreement/investment at say a 90% her and 10% me. It seems to me this would have less administrative costs and still safely stay under my monthly max income. Please advise what you would suggest and why. Thanks

    • Matt Horwitz February 15, 2019

      Hi David, this is really a conversation for an attorney. Details of social security are outside of our wheelhouse. Keep in mind, if the LLC is taxed in its default status with the IRS (a Single-Member LLC taxed as a Sole Proprietorship or a Multi-Member LLC taxed as as Partnership), the Members cannot receive a W-2 salary and cannot be an employee. They are considered self-employed. In a Single-Member LLC, the owner would take “draws”. In a Multi-Member LLC, the owners would take “distributive shares”.

      An actual non-LLC Member could be a W-2 employee of an LLC, as an FYI (but that doesn’t sound like that’s what you need). Also, if the LLC were taxed as an S-Corp, then all LLC Members (aka S-Corp Shareholders) would also be employee-owners and receive a W-2 salary, however, LLC/S-Corp is not the likely not the route new businesses take. Thanks for your understanding and hope that helps.

  26. Jay Crouch February 17, 2020

    I want to form a multi member LLC with my wife, son and daughter in law. On the IRS website, it says that they will have to initially classify it as a partnership but if I do not accept the default classification I can file File:
    Form 8832 (Entity Classification Election) to elect corporate status or
    File Form 2553 (Election by a Small Business Corporation) to elect S corporation status.
    I’m not sure what these options are for. Thanks for the help

    • Matt Horwitz February 17, 2020

      Hi Jay, a Multi-Member LLC being taxed as a Partnership is the default tax election. Form 8832 would be used if you want your LLC taxed as a C-Corporation (not very common). And Form 2553 would be used if you want your LLC taxed as an S-Corporation. S-Corp taxation is something you may want to look at down the road, once you have a decent amount of net income in proportion to the number of LLC Members (in order to make the administrative costs of an S-Corp election worth the potential tax savings). Hope that helps!

    • Jay Crouch February 17, 2020

      Thanks for the quick response, so do now it sounds like I should continue on with letting it default to a partnership. Will I be able to make changes with the IRS at a later date? If i let it default to a partnership, will we have the same protection as an LLC?

      • Matt Horwitz February 17, 2020

        Hi Jay, correct. Simply be applying for an EIN for your LLC (and not filing Form 8832 or Form 2553), your LLC will be taxed like a Partnership. I placed emphasis on “like a” because your LLC will still protect your personal assets from events that occur within the business. The LLC is a separate legal entity created by state law. The IRS just taxes your Multi-Member LLC like a Partnership because their is no “LLC tax classification” with the IRS.

        If you’re curious, when LLCs first came into existence (late 1970s), the IRS didn’t know how to tax them and they decided to tax all LLCs like C-Corporations. Then some years later (late 1980s), the IRS said all LLCs would be taxed like Partnerships. But things got much better in 1997 when via Title 26 of the Code of Federal Regulations, Sections 301.7701-1 through 301.7701-3, the IRS created what is known as “Check the Box” regulations. They basically said, “Fine, you pick how you want your LLC to be taxed“.

        So an LLC can actually be taxed in 7 different ways!

        The first tax classifications are “default” (meaning they occur naturally by obtaining an EIN and telling the IRS how many Members the LLC has… and by not making special elections; see Qualified Joint Venture below).

        By default, a Single-Member LLC is taxed as Disregarded Entity LLC. There are a few subtypes to this:
        • If the LLC is owned by one person, the LLC is taxed like a Sole Proprietorship.
        • If the LLC is owned by a non-resident alien, the LLC is taxed like the non-resident alien is taxed.
        • If the LLC is owned by another company, the LLC is taxed like a branch/division of the parent company.

        By default, a Multi-Member LLC is taxed like a Partnership. There is one exception to this rule: Multi-Member LLCs owned by a husband and wife in a community property state can be taxed as a Qualified Joint Venture.

        Now, instead of those default elections, both a Single-Member LLC and a Multi-Member LLC (minus a few exceptions) can tell the IRS, “Hey, we don’t want the default tax classification… we want our LLC to be taxed like a Corporation”. And the IRS has 2 subtypes:
        • An LLC can elect to be taxed as a C-Corporation (by filing Form 8832)
        • An LLC can elect to be taxed as a S-Corporation (by filing Form 2553)

        Regardless of the 7 types of tax classification the IRS uses, the LLC is still a separate legal entity and it offers liability protection to the owners from events that occur within the business. Initially, it can all seem confusing because of how the IRS “looks at” LLCs and how confusing the terminology can be!

        And yes, you can change your LLC’s tax classification at any time… a few months from now or 12 years from now.

        That’s probably way more than you needed to know lol! But hopefully this reply was helpful… and I think it’ll also help future readers :-)

        • Jay Crouch February 18, 2020

          Matt, thanks again for the quick responses. That was a lot of great information and has helped me out. Thanks again for your time, it is greatly appreciated.

          • Matt Horwitz February 18, 2020

            Hi Jay, you’re very welcome. Best wishes with your business :)


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