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Limited Liability Companies (LLCs)

An LLC can choose to be treated for tax purposes as either a partnership or as a corporation. This is done by electing how to be taxed. Unlike a partnership, a single member LLC is allowed (except in states that require at least two members).

If the LLC chooses to be taxed as a partnership, its tax advantages and disadvantages will be the same as those of a partnership. Similarly, if it chooses to be taxed as a corporation, it will have the same advantages and disadvantages as a corporation. Single member LLCs are treated as sole proprietorships for tax purposes.