Single-Member vs Multi-Member LLC

LLC (limited liability company) owners are called members. Each member owns a percentage of the business, which is  known as their “membership interest." An LLC can have any number of members. Single-member LLCs and multi-member LLCs have different tax obligations that you should be aware of as an LLC founder.

Single-Member LLC

Single-member LLCs have, well, a single member.

Single-member LLCs are considered disregarded entities, so they are generally taxed the same as unincorporated sole proprietorships. However, forming an LLC will give you critical liability protections compared to a sole proprietorship.

Multi-Member LLC

While the LLC structure remains the same, multi-member LLCs are considered partnerships by default. This means that they are responsible for filing IRS Form 1065 — a requirement that doesn't apply to single-member LLCs. Multi-member LLCs must also define the membership interest of each member.

Please note that eligible single-member and multi-member LLCs can file IRS Form 2553 to file taxes as an S Corp. See the articles below for more information about single-member and multi-member LLCs:

• Changing a single-member LLC to a multi-member LLC (and vice versa)
• What is a disregarded entity?
• Sole proprietorship vs. LLC: What's the difference?