A Single-Member LLC, abbreviated SMLLC, is an LLC with just 1 owner. An LLC owner is referred to as a Member, hence the name “single member” LLC. The purpose of forming an LLC is to protect the personal liability of the owners. Forming an LLC separates your personal assets from that of the business.
All 50 states allow for Single-Member LLCs and this is the most popular type of LLCs formed in the United States.
A Single-Member LLC can be owned by an individual person, or it can be owned by an existing company, such as another LLC, a Corporation, or any other legal entity.
A Single-Member LLC can also be owned by a non-US citizen or non-US resident. There are no residency or citizenship requirements for the ownership of LLCs, whether the LLC’s are Single-Member LLC or Multi-Member LLCs.
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Taxes & Single-Member LLCs
By default, a Single-Member LLC is treated as a “disregarded entity” by the IRS for federal tax purposes.
This means you will pay taxes the same way as a Sole Proprietorship does. The LLC will report its income or losses on a schedule C, which will become a part of your personal 1040 income tax return. If your income is earned by other means, you may also have to attach additional schedules to your personal income return.
Please keep in mind we said “pays taxes the same way as“. A lot of people get confused by this and think that their LLC is a Sole Proprietorship. At the state level, your LLC is simply an LLC; a legal entity formed by state statute. However, the IRS does not have a tax classification for LLCs, so the IRS just taxes the LLC according to the number of Members the LLC has.
Sole Proprietorship taxation is the default tax classification for LLCs with 1 owner. Alternatively, if you’d like your Single-Member LLC to be taxed as an S-Corp, you can do so via IRS Form 2553, or if you’d like your Single-Member LLC to be taxed as a C-Corp, you can do so via IRS Form 8832. If you are thinking about electing either form of “corporate taxation” for your LLC, we strongly advise you speak with multiple accounts in your state. Just ring a few up back to back to get a few different opinions. Often times, these types of taxation are not as simple as some articles lead you to believe.
How to pay yourself in a Single-Member LLC?
If you leave your Single-Member LLC in its default tax status as a Sole Proprietorship with the IRS, you will not be taking a salary from the company, but instead you will be taking distributions (which are subject to self-employment taxes).
If your Single-Member LLC elects to be taxed as an S-Corp with the IRS, then you will have to take a reasonable salary, pay payroll taxes, and file a corporate 1120S tax return every year.
In order to put money into the LLC you will make what are called Capital Contributions. And in order to take money out of the LLC, you will take what are called Capital Distributions.
Can I get an EIN for a Single-Member LLC?
Yes, you can obtain an EIN – also known as a Federal Tax ID Number – from the IRS for your Single-Member LLC. You will use your EIN to open your business bank account, obtaining financing, file certain taxes, and for some business licenses and permits.
How to Form a Single-Member LLC?
You will form a Single-Member LLC the same way you would form any LLC; you will file Articles of Organization (or similar form; like Certificate of Organization or Certificate of Formation) with the Secretary of State in the state where you’re forming your LLC. For example, if you’re forming a Single-Member LLC in California, you will file an Articles of Organization with the California Secretary of State.
There are no states which have a different Articles of Organization for Single-Member LLCs, however some states’ Articles of Organization will have a checkbox where you will designate whether or not your LLC is Single-Member.
To form your Single-Member LLC, you can follow our free LLC formation guides, which we have provided for all 50 states. To learn more about LLCs, check out our LLC Learning Center.
51 comments on “What is a Single-Member LLC (SMLLC)?”
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.
Hi Matt! Great article. It is important to note that in community property states, like Texas, a married couple (an LLC owned solely by a married couple) can elect to be taxed like a single-member LLC (i.e., a disregarded entity) if they satisfy the following requirements:
– In a community property state, the LLC is established/created
– The married pair are the only LLC owners (there are no other people or firms that own the LLC)
– Both spouses actively contribute to and manage the firm
– The married pair files a joint federal income tax return
– The LLC has not chosen to be taxed as a corporation
You’re welcome Mike!
Hi Matt, if the LLC is wholly owned by another LLC do I select 2 LLC members on the SS-4? With me as the responsible party? How Should the EIN read in this scenario? Company Name My Name Member? Thanks in advance.
Hi Mike, an LLC owned by 1 other LLC only has 1 owner, not 2. So you’d select/enter 1 Member on Form SS-4 (or in the online EIN application).
Note: When you get back your EIN Confirmation Letter (CP 575), you’ll see your name and the abbreviation “SOLE MBR”. This is a bug that’s been in place for years and the IRS hasn’t fixed it yet. But don’t worry, it’s not material.
One thing I like to do when applying for an EIN online, is right before I submit the application, there is an “EIN Summary” page. I always save that page to PDF (or print it out) as it includes more details about the application. Once you click submit, the EIN Confirmation Letter (CP 575) doesn’t include the info submitted (and there’s no other way to get a copy). So I like having that extra record. If you’re applying for an EIN by submitting Form SS-4 by fax or mail, just make a copy of your Form SS-4 before submitting it. Hope that helps!
Super helpful Matt, thanks!
Unfortunately had a 3rd party help establish the new LLC and obtain the EIN, so I was unable to save the summary page, but comforting to know that. I landed here googling around to see if they set it up incorrectly, as it does indeed say my name and the abbreviation “SOLE MBR”.
Follow up question: I suppose I now need to file 8832 so that the LLC is taxed as a partnership? I do not want any personal tax liability here.
You’re very welcome! I see. Well glad I could help clarify the “SOLD MBR” thing. It scares everyone lol!
If your LLC in question (the child LLC) is owned by 1 another LLC, it’ll be taxed as a disregarded entity. More specifically, it’ll be taxed as a branch/division of the parent company. Said another way, because it doesn’t have 2 or more owners, it won’t be taxed as a Partnership (so you don’t need to file Form 8832). Am I following correctly, and does that make sense?
Makes sense! However, to add some context, the the child LLC (DE) is wholly owned by a foreign entity (Cayman Exempted Company). In this scenario would the 8832 be necessary?
And when you applied for the EIN, did you say there was 1 Member or 2 Members?
Good question, I will have to ask them. I presume it would just say MEMBER after my name and not SOLO MBR, had they put 2 members?
Yes, that’s exactly correct (I was just double-checking – and asking another way – to be sure). So because there is only 1 Member of the Delaware LLC, you don’t have to file Form 8832 to elect for the LLC to be taxed like a Partnership (and even if you wanted to, you couldn’t; because there’s only 1 Member). The Delaware LLC, by default, will be taxed like a branch/division of the foreign company.
Although, it does appear that I can elect a 1 member DE LLC to be taxed as a corporation via Form 8832. I wonder why one would do that vs be treated as a branch/division…
Hi Mike, yes, you can elect for an LLC to be taxed as a Corporation. The pros and cons vary by situation, but we recommend speaking to an accountant about it.
My father was operating a small business as a single member LLC. He passed away over a year ago and I inherited the business. I’ve maintained the same LLC with an amended operating agreement and registration with the state at the start of 2020. I’ve just now found the IRS page on “Do I need a new EIN?” and it appears that it applies to my situation. Assuming that’s correct, in terms of a start date for the business on the EIN application, would I list the original date that he started the business or the date that I took over the business? Thanks for any insight you can provide.
Hi Craig, I’m sorry to hear about your loss. I first recommend speaking with an estate attorney to make the LLC membership interest properly transferred to you. LLC Membership interest doesn’t automatically transfer on death. I’m not 100% certain on the EIN for this.
I set up an LLC for my husband and made him and myself members. He does not pay me but I read it is common to add your spouse as a member. So now that I am applying for the EIN do I list it as a 2-member LLC? And will this not make it a single member in the IRS’s eyes? Did I make a mistake setting up the LLC with me listed?
Hi Pamela, if there are 2 Members in the LLC, then you’d tell the IRS there are 2 Members. By default, the LLC will be taxed as a Partnership because there are at least 2 Members. The exception to that is for a husband and wife Qualified Joint Venture LLC (if located in a community property state). Hope that helps.
Hi Matt, what tax forms should I file for my llc single member approved 11/17 registered 1/1/21.?Ive read I don’t have to pay the $800 for this year since it’s my first year, but do I need to fill out certain forms even tho it doesn’t need to be paid?I tried getting a lawyer to help me out but it’s no help he told me to go get an accountant is that true?Also he said I don’t need an operating agreement.please help.
Hi Laura, while an Operating Agreement isn’t required, it’s really helpful to have. You can download one from our website: California LLC Operating Agreement.
Yes, the questions you asked are related to the California Franchise Tax Board and are tax-related, which is why the attorney told you that. I’m not sure what you mean by “approved” 11/17/2020, but “registered” 1/1/2021. Do you want to share the name of the LLC? We’ll be able to tell you the LLC effective date and whether or not the new California LLC franchise tax rules due to AB 85 apply.
Got an email it was approved on 11/17/20 for a waiting filing date for 1/1/21.will I still have to pay the $800 for 2020 and 2021?
Hi Laura, I’m still not sure what “for a waiting filing date for 1/1/21” means. I can’t tell what the LLC effective date is (therefore I can’t explain if you do or don’t owe franchise tax for 2020 and 2021). Can you share your LLC name? I can delete it from your comment after I search the online record.
The name is (NAME REMOVED). It was a future file dated for 1/1/21.
Ah! Future file date. Now I understand :) I just checked the state’s database. Your LLC does have an effective date of 1/1/2021, so you won’t pay the $800 franchise tax until April 2022. Your LLC will need to file Form 568 at that time as well. That is a tax return, so we recommend hiring an accountant. If you think your LLC will make more than $250k in 2021, then the LLC needs to file Form 3556 and pay an LLC Estimated Fee by June 15, 2021. If you have a non-resident Member, there is also withholding and a form to file. Let me know if you’d like me to remove your LLC name from your comment.
Thank you for your help Matt!!! Yes please remove the name.Thank you so much for answering so fast.
You’re very welcome Laura :) The name has been removed.
I have a question regarding a Foreign Single Member Manager managed LLC’s.
A couple of months ago I opened an LLC with a international agency but two months after when I received the EIN Confirmation Letter (CP 575) I noticed that one of their associates was presented as the Responsible Party of my LLC.
This agency told me there was any problem with it, that everything was ok as I was presented as the owner when they filled the SS-4 Form but, since I had my doubts I called the IRS which to my surprise they confirmed that my name did not appear at all in the SS-4 form they presented.
I immediately requested them to give me an explanation since they lied but they refused to do it and everything went down from there.
After just two month of the LLC being opened I dissolved it for obvious reasons.
Should I present Forms 5472 and 1120 if the LLC did not have any activity nor I was presented before the IRS as the Sole Proprietorship (disregard entity)?
Thank you very much!
You have THE best LLC website btw ;)
Thanks David! Bummer to hear about that situation, but we’re glad you figured it all out. This is a challenging question to answer with 100% certainly, but we think you are fine to not file Form 5472 and 1120 since you’re not connected with that EIN.
Hi my wife and I have registered our business as a Single member LLC in the state of Texas. She was listed as the on EIN application with her Social Security number. We file our taxes jointly and understand that as a single member LLC (Husband and Wife) we can continue this way. As a married couple single member LLC What is the proper way to fill out a W9?
Line 1 (Should that be the member who filed for the EIN?
Line 2: The name of the LLC
Line 3: Checkbox for Individual /Sole Proprieter / Single Member LLC
Which should be used? My wife SSN or the EIN my wife received for the Sole Member LLC? Reading the IRS form instructions I think we are supposed to use her social security number instead of the EIN for the LLC. Is this correct?
“If you are a single-member LLC that is disregarded as an entity
separate from its owner, enter the owner’s SSN (or EIN, if the owner has
one). Do not enter the disregarded entity’s EIN.”
Hi Will, it’s recommended to use your wife’s name. You are correct on 1 though 3. #1 Would be your wife’s name. #2 would be the name of the LLC. #3 would be the checkbox for “Individual/Sole Proprietor/Single Member LLC”. Technically, your wife’s SSN is supposed to be used, however, it’ll also work with using the EIN. You can use the EIN for privacy reasons if you’d like. Hope that helps :)
I am a SMLLC. Can you link where I would change my tax classification to S selection on the iRS website? I heard I needed to be under an S Corp, and do a K1 for my individual tax bracket. I’m not sure where to find this, as the forms listed on https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies
I also wanted to ask, I had two clients who asked for a W9 which I provided, but with my business EIN. Should I have used my individual social in this situation? I was wondering if I need to send them a new form with my personal social, and not my business EIN.
And thirdly, I was advised to run payroll for myself with a company such as ADP to help lower my tax liabilities. Is this something you would recommend, or see as normal business practice for a small business? I rather not waste my income on such expenses, but if it will in the end save me on taxes, I will definitely do it.
Thank you for your guidance, stay well & safe!
Hi Ama, sure thing. We have more information here: LLC taxed as an S-Corporation. Regarding the W9, use of the EIN is fine. We actually recommend using the EIN instead of the SSN for security and privacy reasons. The only way you can run payroll for yourself is if your LLC is granted S-Corp tax treatment (or if your LLC were taxed as a C-Corporation and you were an employee). If you decide to go LLC/S-Corp, you can work with any payroll company you’d like. Hope that helps.
Hi! I accidentally filed papers as an SMLLC with someone as an agent. It turns out I need an MMLLC, with myself as the managing member and the former agent at a member! What is the best and quickest way to change from SMLLC to MMLC in State of NY?! Please help!
Hi Jonathon, have you already obtained an EIN for your Single-Member LLC? Did you adopt and sign an LLC Operating Agreement?
I am the single owner of a business LLC. As I want to retire, I wish to add my son to the LLC. He is currently manager of the business. I can’t find anything that explains how to do this; could you help please.
I was the single member of an LLC and had a registered agent. The LLC was for a chapter of a social club. The chapter decided to dissolve and cease operations with the exception of one person. I, being the only member on the LLC, dissolved the LLC with the State it was registered in. As far as the funds in the account for the chapter, my registered agent is telling me I need to send him the funds because they now belong to him even though I was the only member listed on the LLC, he was just listed as a registered agent only. Is this the case or can I distribute them as I see fit to the guys who were in the chapter? We have no debt and owe no one anything. I felt the right thing to do was split it evenly among the gentleman who were in the chapter since the LLC and chapter have now dissolved. Again, I was the sole member on the LLC and no one else was on it but me.
Hi Wayne, as per how the LLC winds up its affairs, you’ll want to look at the Operating Agreement. Aside from something in the Operating Agreement, if you are the only Member, it sounds very strange for any distributions to go to the Registered Agent.
I own a small sole proprietorship company right now that I want to make a single LLC, with me as the sole owner. My questions are: Do I make it manager or member governed? Is there a reason to be one or the other as a single owner?
Am I the governing authority?
Do I enter into an arrangement with a registered agent prior to filing?
Do I cancel my current EIN as soon as a new one is issued for the LLC?
On the operating agreement, it asks about capital provisions. If I am still using all of the assets I purchased for the sole proprietorship and the money that is currently in its business checking account, do I figure up all of that and put that as my capital contribution?
I saw something asking who the organizer is. Is that me?
Thank you so much for answering these questions.
Hey Bruce, hope this helps:
• When changing from a Sole Proprietor an LLC, you can contribute the assets of the Sole Proprietorship as the capital contribution if you like. You can also include cash.
• More info here: changing Sole Proprietorship to LLC (includes the answer to your EIN question, too)
• Click on your state on our homepage for more details about the Registered Agent requirements/options and about governing authority.
• If you want to use a Commercial Registered Agent, you’d sign up with them first before filing the LLC forms with the state.
• Member-managed LLC vs Manager-managed LLC
• What is an LLC Organizer
After asking my question, I saw that you offer a basic package which includes a registered agent for the first year. It seems like a no brainer to use this but I have a few last questions. After using the basic service, will I still need to do the operating agreement myself? How do I create the form to take to the bank to open a new account for the business? Do I need membership certificates and if I do where do I get them if I use the basic service?
Hi Bruce, it’s not our company directly, but a company we recommend. If you look at the packages they offer, you’ll see the base package doesn’t include an EIN or Operating Agreement at this time. You can find instructions for that on our site if you want to do it yourself though: LLC Operating Agreement and EIN for LLC. Or if you look at the 2nd and 3rd packages, they include the Operating Agreement and EIN. LLC Membership Certificates aren’t needed. Membership interest can be controlled via the Operating Agreement. You can certainly use them if you want, but they are nothing more than a fancy visual representation of what’ll be in your Operating Agreement. Hope that helps.
I’ve become cross-eyed from searching the interwebs and I’m coming up with conflicted or incomplete information. My question for you is: Can an SMLLC (disregarded) be the sole owner of another SMLLC (disregarded)?
For example: Me -> SMLLC 1 -> SMLLC (owned solely by SMLLC 1, which is solely owned by me).
Hi Jack, yes an LLC can own another LLC. In your example, yes, you can form LLC A and be its owner, then you form LLC B and LLC B is owned by LLC A. And yes, both LLCs are disregarded LLCs. Hope that helps.
I am trying to see what the best option is to keep the sole proprietor entity when i want to add my partner. For legal reason, i need him on the LLC. What do you recommend me to do? Should i create a partnership instead? is so, do you know the process to close and reopen it? is there another option? maybe to add him as a member? Please let me know.
Hi Lina, I don’t fully understand your question as there’s some ambiguity. If you have an existing LLC that is owned by you, then it’s an LLC taxed as a Sole Proprietorship (I wouldn’t use the term “sole proprietor entity”). If you want to add a Member to your LLC, then the LLC would therefore by taxed as a Partnership. You’d need to file IRS Form 8832 to make that election and you’ll also need to apply for a new EIN. Hope that helps.
I currently have an office together with a friend. We both have an LLC (each) with only one member but we share an office. Our advertising includes both LLC names and also the registration in the city shares both names.
Is it okay for two LLCs to share the same office and the same registry in the city?
or each LLC must be registered separately? I think for local tax purposes it could affect us.
Hi Ana, both LLCs can use the same address. I’m not sure what you mean by “share the same registry”. Hope that helps.
We (my wife and I) live in Illinois and has a living trust(joint with my wife and I and my home in Illinois is part of my living trust. Recently, I bought an investment property in Tracy, CA. The investment property is owned jointly by my wife and I. I am interested in forming LLC and have the living trust be member of LLC. What is the best way to add my investment property to my living trust(is that like a sub trust) and be member of LLC. what will be my liability against lawsuits for my investment property in California – is my primary residence in Illinois available for lawsuit. For taxes, is it still filing taxes for my LLC using my personal taxes
Hi Kiran, we do not work with trusts, so don’t know the answers to your questions. I recommend speaking with a few real estate attorneys for assistance. Thank you for your understanding.
Is a Manager-Managed Single-Member LLC with 2 manager’s but only one member, still considered a disregarded entity? That was my intention when filing.
Hey Bob, it’s all about the LLC Members. So yes, an LLC with 1 Member (regardless of management or number of Managers) is still a disregarded entity. Hope that helps!