What Is A Single-Member LLC? Quick Guide (2026)

What a Single-Member LLC Is

So what is an LLC? An LLC is a business entity that exists separate from its owner, with its own assets and liabilities. As a result, having an LLC can protect your personal assets from debts and legal issues related to your business.

LLCs can have one or more owners called LLC members. A single-member LLC is simply an LLC with only one owner.

How a Single-Member LLC Works

You can form a single-member LLC by filing articles of organization, also called certificates of formation or certificates of organization, with your state and paying a fee.

LLC members own and control the company. Solo owners, by definition, don’t have to worry about disputes with co-owners over management decisions and membership votes.

Even single-member LLCs, though, must observe corporate formalities to prevent a court from piercing the corporate veil. Specifically, you must maintain financial separation and avoid intermixing personal and company funds.

Taxes for a Single-Member LLC

Single-member LLCs can elect either pass-through or corporate taxation with the IRS.

In corporate taxation, the LLC reports its profits and losses and pays corporate income tax. The LLC member only owes taxes on the dividends or salary paid to them. This election can result in double taxation, but it allows the member to leave profits in the company for future expansion tax-free.

In pass-through taxation, the LLC is not taxed. Instead, the LLC “passes” its profits or losses to the member. The member then includes those profits or losses on their personal tax filing. This election avoids double taxation, but the member pays income taxes on all company profits instead of those distributed to the member.

For example, suppose the LLC makes $1 million in profit and distributes $50,000 to the owner. The owner would pay taxes on the $1 million earned rather than the $50,000 paid.

Do You Need an EIN?

Single-member LLCs electing pass-through taxation do not need an EIN, unless they hire employees or pay excise taxes. Generally, all single-member LLCs electing corporate taxation need an EIN.

Single-Member LLC vs. Other Entities

Alternative entities to single-member LLCs include sole proprietorships and S-corporations (S-corps). If the owner forms no entity, the business is a sole proprietorship. Comparing an LLC vs. sole proprietorship, sole proprietorships lack the liability protections of an LLC.

The main difference between an S-corp vs. LLC is that S-corps can easily add shareholders because corporations can have outstanding shares. An LLC cannot have outstanding shares, so the owner must create new ownership shares to add members.

How to Pay Yourself

You’ll need to pay yourself with profit distributions, also called owner draws, when the LLC elects pass-through taxation. If your LLC elects corporate taxation, you must pay yourself a reasonable salary.