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Single Member LLC

There are many factors to consider when starting a new small business, setting up an online store, offering services as a side gig, or any other type of business. You may question which business entity is best for you. When facing this decision you will want to consider whether a Single Member Limited Liability Company (LLC) or Sole Proprietorship is the best formation. 

What is a Single Member LLC?

An LLC is a formally recognized business entity formed within a state and can have one or more owners (known as members). A single-member LLC has only one member.

One of the most straightforward benefits to an LLC is the limited liability.  An LLC is considered a separate entity from you, meaning if your LLC business goes bankrupt or is sued, your personal assets outside of the LLC are normally protected from creditors and lawsuits.

How to Form a Single-Member LLC?

Single member LLCs have more paperwork when filing.  We have it broken down into six steps that are detailed out on our Limited Liability Company page. 

  1. Choose a name for your multi-member LLC
  2. Choose a Registered Agent
  3. Decide on Member-Managed or Manager-Managed
  4. File the Articles of Organization.
  5. Apply for your EIN
  6. Get an Operating Agreement

Maintaining a Single-Member LLC

With a single-member LLC, you may be required to do some annual record keeping to keep the LLC active:

  1. Annual Fee - This fee is usually paid every 1 or 2 years depending on the state to keep your LLC active and good standing. This must be paid even if your LLC does not have any income or activity.  If you do not pay the annual state filing it could lead to shutting down your LLC and making it inactive.
  2. Annual Report - You may also need to file an annual report each year.  This report is to keep the state informed of any changes or updates to your LLC.  Find out more information on Annual Reports here.

How is a Single-Member LLC Taxed?

The IRS states if a single member LLC does not choose to be taxed as a corporation, it is considered a "disregarded entity".  This means the LLC is taxed the same federally. However, an LLC may claim the tax deducitions for the business (unless an LLC elects to be treated as C corporation or S Corporation for tax purposes).

Single Member LLC Tax Documents:

  • Schedule C (Form 1040): To report income or loss from a business you operated or a profession you practiced as a sole proprietor AND/OR
  • Schedule E (Form 1040): To report income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in real estate mortgage investment conduits (REMICs).
  • Schedule SE (Form 1040): To pay self-employment tax.
  • Form 1040: To file your businesses profit or loss on your personal tax return

Frequently Asked Questions

Why do I have to pay a self employment tax?

How often do you have to make tax payments?

There a many things to think about if you are looking to take a leap into starting your own business.  It is always wise to seek the advice of a CPA or Attorney to help make the best business decision for you.

If a single member LLC is best for you and you are ready to get your business up and running, Midland Forms is waiting to help. We have the knowledge and experience to set up your single member LLC business entity for you. Please reach out to us at (239) 472-0074 or click here to get started.