What are the single-member issues?
A single-member LLC is a “disregarded entity” for federal tax purposes. This means that the LLC does not file a tax return, and the income will be reported on the personal tax return of the individual member. Also, there is a question as to whether charging order protection will apply to a single-member LLC. A bankruptcy court in Colorado ruled that a single-member LLC could not rely on charging order protection, because that protection was intended to protect innocent, third-party members from the economic damages of having a partner’s interest foreclosed.
