New federal law: Most business entities must file a Beneficial Ownership Report to comply with the Corporate Transparency Act.
An LLC offers several tax benefits, including simply having the flexibility to choose how you want the entity to be taxed.
Find out more about Business Taxes
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by Michelle Kaminsky, J.D.
Freelance writer and editor Michelle Kaminsky, Esq. has been working with LegalZoom since 2004. She earned a Jur...
Updated on: November 29, 2023 · 2min read
When deciding on a business structure, one of your primary concerns should be taxes. If you are considering a limited liability company (LLC), keep in mind that the Internal Revenue Service(IRS) doesn't have a special tax classification for LLCs. This gives you the freedom to choose how your LLC will be taxed.
If you own a single-member LLC, you may elect to be taxed as a sole proprietorship, partnership, or C corp. If your LLC has more than one owner, a sole proprietorship isn't an option, but the remaining three are.
Here are some factors to consider when deciding how you want your LLC to be taxed.
Once you make a decision on tax status, your next step is more paperwork. That is, if you want your LLC to be taxed as anything but a sole proprietorship, you must file Form 8832 to inform the IRS of your LLC's partnership or corporation status.
For most small business owners, structuring a business as an LLC offers the most versatility in determining how the business is taxed, while also offering the limited liability of a corporation but with less formality. Because every LLC is unique, you may wish to obtain solid legal advice before moving forward on tax status selection.
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