Single Member or Multiple Member LLCs by LegalZoom Staff

Single Member or Multiple Member LLCs

by LegalZoom Staff
updated August 20, 2021 ·  1min read

Whether you form a single-member or multiple-member LLC is not just a function of the number of people involved. Because of the advantages and disadvantages of each, a single business owner might want to form a multiple-member company and multiple people might want to form single-member companies.

For example, a person with a one-person business who wants to start a multiple-member LLC to gain asset protection, might want to make his spouse, parent, or child a member. Two people who own several properties as separate LLCs might want to make them single-member LLCs owned by one multiple-member LLC to avoid filing a separate tax return for each.

You will have an operating agreement whether you are a single or multiple-member company. But for a multiple-member company, you need to be more careful to spell out each others' rights in the event of a split-up, death, or an irreconcilable disagreement.

Taxes

A single-member LLC is easier for tax purposes because no federal tax return is required, unless the business decides to be treated as a corporation for tax purposes. The income is reported on the member's tax return. A multiple member LLC must file tax return, and give the members K-1 forms to file with their returns.

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This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.