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A Single Member LLC (Limited Liability Company) is a type of business entity owned by one individual, providing limited liability protection, meaning the owner's personal assets are generally protected from business debts and liabilities. It combines the liability protection of a corporation with the tax benefits and simplicity of a sole proprietorship. For tax purposes, a Single Member LLC is typically treated as a disregarded entity, meaning its income and expenses are reported on the owner's personal tax return. However, the owner can elect for the LLC to be taxed as a corporation if desired.
A Multi-Member LLC (Limited Liability Company) is a type of business entity owned by two or more individuals or entities. It offers limited liability protection, meaning the owners' personal assets are generally protected from the business's debts and liabilities. Multi-Member LLCs combine the liability protection of a corporation with the tax benefits and operational flexibility of a partnership. By default, treated as a partnership for tax purposes. The LLC files an informational tax return (Form 1065), and each member receives a K-1 form detailing their share of the LLC's income, deductions, and credits. Members report this information on their personal tax returns. Alternatively, the LLC can elect to be taxed as a corporation.
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