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In the end, it seems likely that a member of a SMLLC will have no less protection than a sole shareholder of a corporation. There is one circumstance, however, where a multiple member LLC holds a distinct advantage over a SMLLC protecting the assets of the LLC from the creditors of the member.
Taxation: Multi-member LLCs usually elect to be taxed as pass-through entities, while single-member LLCs are usually treated as disregarded entities for tax purposes. These are different classifications, but the effect is the same, with all members paying any LLC-related taxes through their personal tax returns.
What To Include in a Single-Member LLC Operating Agreement Name of LLC. Principal Place of Business. State of Organization/Formation. Registered Office and Registered Agent. Operating the LLC in Another State (Foreign LLC) Duration of LLC. Purpose of LLC. Powers of LLC.
The term single-member is used to recognize that the LLC has one owner, as opposed to an LLC in which there is more than one owner. (In an LLC, owners are called members.) A single-member LLC has all the same advantages and disadvantages of a multi-member limited liability company.
For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity.
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