LLC Taxation

A limited liability company (LLC) is not recognized by the IRS as a taxing entity. So an LLC pays income taxes based on the membership structure of the company. A single-member LLC is considered a disregarded entity, and pays income tax as a sole proprietorship, through the member's personal tax return. A multiple-member LLC pays income taxes as a partnership.


An LLC can also elect to pay income tax as what the IRS calls "an association taxable as a corporation." This election is made on IRS Form 8832.