How are Limited Liability Companies (LLCs) taxed?
A A single-owner LLC defaults to being taxed as a sole proprietorship. Income/Loss from the LLC is reported on the owner’s personal income tax return. A multi-member LLC defaults to being taxed as a partnership and a partnership tax return must be filed. The profit or loss is then reported on the owner’s personal tax return. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days or creating the LLC.
A. A single-owner LLC defaults to being taxed as a Sole Proprietorship. Income/loss from the LLC is reported on the owners personal income tax return. A multi-member LLC defaults to being taxed as a Partnership. A Partnership tax return must be filed. The profit or loss is then reported on the owners personal tax return. Any LLC can elect to be taxed as a corporation. To do so, one must file an election within 75 days of creating the LLC.
