How will my LLC be taxed?
By default, an LLC is taxed as a partnership if it has two or more members, or as an entity disregarded from its owner (like a sole proprietorship) if it has a single member.
If the LLC’s owners file the IRS Form 8832 , they may elect to have the LLC taxed as a corporation for U.S. federal (and state) income tax purposes.
Thus, one of the primary advantages for a small business of an LLC over a C-corporation is that the member(s) can choose to have the income generated through the LLC only be taxed once — at the individual level — just like a traditional partnership. This means that there is no taxation at the corporate level and all income generated through the LLC will only be taxed once.
The method of accounting that you use will also play into the decision of the method of taxation.
[IRS]: Limited Liability Company (LLC).
Cash vs Accrual Accounting — what’s best for you.
The foregoing is not intended to be, and should not be construed to be, tax advice. This website offers general answers to general questions based on information obtained from www.irs.gov and other publicly available information. Collaborative Fund cannot be held responsible for the results of any position taken on a tax return by any user of this site. Users should always obtain independent tax advice from a qualified tax professional to determine the tax consequences applicable to such user’s personal situation.
