Key Takeaways

  • An LLC with one member, also known as a single-member LLC (SMLLC), is allowed in every U.S. state.
  • It combines limited liability protection with simplified tax filing similar to a sole proprietorship.
  • The IRS treats most single-member LLCs as disregarded entities, but owners can elect corporate or S corp taxation for tax flexibility.
  • Despite liability protection, courts may pierce the corporate veil if the owner mixes business and personal finances.
  • Some professional services (law, medicine, accounting) must form PLLCs instead of LLCs.
  • Maintaining separation between personal and business activities is essential to preserve liability protection.
  • A single-member LLC must file Articles of Organization, designate a registered agent, and obtain an EIN for taxes and hiring.

Can an LLC have one member? Yes, a limited liability company with only one member is known as a single-member LLC. Choosing this type of business entity provides several distinct benefits. 

What is an LLC?

LLCs are a type of business entity that company owners can use to protect themselves from personal liability, including having their assets pursued to cover obligations and debts of the business.

There are also numerous tax benefits that result from forming an LLC, such as the following:

  • The ability to choose how your company will be treated.
  • Increased contribution limits to insurance policies and retirement funds.
  • The ability to lease personal assets to your LLC.

States first issued laws related to forming LLCs in the late 1970s, and when this business structure was first offered, having at least two members was a typical requirement. Traditionally, LLCs have functioned like partnerships, while providing the personal liability protections offered by corporations. If you form an LLC, your company can have as many owners as you wish, who will be called members. 

Advantages of an LLC With One Member

A limited liability company with one member offers a flexible structure that is especially beneficial for small business owners, freelancers, and independent contractors. This structure combines corporate-style liability protection with the ease of sole proprietorship taxation.

Key benefits include:

  • Personal asset protection: The owner’s personal assets are generally shielded from business debts and lawsuits.
  • Tax flexibility: By default, the IRS treats a single-member LLC as a disregarded entity, but owners can elect to be taxed as a corporation or S corporation for potential tax savings.
  • Simplicity: Single-member LLCs are easier to maintain than corporations—fewer recordkeeping requirements, no shareholder meetings, and minimal annual filings.
  • Credibility: Forming an LLC gives a small business more professional legitimacy than operating as a sole proprietor, which can help attract clients and financing.
  • Custom management structure: The owner has full control over operations without needing board approval.

Some states have additional advantages such as low filing fees or no annual reports, making LLC formation accessible for solo entrepreneurs.

Single-Member LLCs

Every state in the country allows for the creation of single-member LLCs. You can also form these entities in the District of Columbia. However, if you choose a single-member LLC, you should be aware that you might not receive the full protections enjoyed by LLCs with multiple members. As you might expect, a single-member LLC is a limited liability company that only has one owner. Even with only one member, this type of LLC provides the same benefits of multiple-member LLCs.

A single-member LLC's owner is not an employee and they will not receive a salary. When the owner of the single-member LLC needs to cover personal expenses, he or she can take this money from the business. Similarly, the owner of the LLC will invest his or her own money into the company whenever it is needed. For the purpose of taxation, the owner and the LLC are considered distinct entities.

A single-member LLC is considered a legal business, and the name of the company should include a designator such as “LLC.” Registering a business name is an important part of forming a single-member LLC. Because establishing a single-member LLC requires following a variety of regulations, they are seen as more credible than sole proprietorships. 

How to Form an LLC With One Member

Forming an LLC with one member involves filing specific documents with your state and ensuring compliance with local requirements. While the exact process varies by state, the key steps include:

  1. Choose a business name that complies with your state’s LLC naming rules (usually must include “LLC” or “Limited Liability Company”).
  2. File the Articles of Organization with your state’s Secretary of State. This document establishes your LLC’s existence and includes basic details such as your name, business address, and registered agent.
  3. Designate a registered agent who will receive legal and tax correspondence on behalf of your business.
  4. Draft an operating agreement. Although not always required, this internal document outlines ownership, management, and procedures. It’s especially important for single-member LLCs to reinforce the separation between personal and business assets.
  5. Obtain an Employer Identification Number (EIN) from the IRS for tax and banking purposes—even if you have no employees.
  6. Comply with state and local licensing requirements, such as business permits or zoning approvals.
  7. Open a business bank account to avoid commingling funds, which can weaken your liability protection.

Some professions—such as law, medicine, architecture, and accounting—may need to form professional limited liability companies (PLLCs) or meet specific licensing requirements before forming an LLC.

Single-Member LLC Taxes

In terms of federal income taxes, the IRS considers single-member LLCs to be a disregarded entity. Because a single-member LLC has disregarded entity status, it can declare profits and losses on the owner's personal income return, Schedule C forms, or the 1040 form.

Since 2009, single-member LLCs have been required to obtain an employer identification number (EIN) from the IRS. Single-member LLCs are also required to collect and pay employment taxes, as well as excise taxes. As a disregarded entity, a single-member LLC will be taxed the same way as a sole proprietorship.

A variety of state and federal taxes apply to single-member LLCs. However, their method for paying these taxes differs from other business entities. Owners of single-member LLCs are regarded as self-employed, meaning they do not count as employees of their business. Because of their self-employment status, owners of single-member LLCs must pay a self-employment tax for both Medicare and social security, which will be based on their company's net income.

When a single-member LLC is considered a disregarded entity, the owner must fill out a W-9 form for independent contractors and use their personal tax identification number when filing taxes. 

Tax Election Options for Single-Member LLCs

By default, the IRS classifies a single-member LLC as a disregarded entity, meaning the business’s profits and losses pass directly to the owner’s personal tax return. However, the owner can change the LLC’s tax classification by filing an election form with the IRS:

  • Corporate Taxation: File Form 8832 to elect to be taxed as a C corporation. This can be beneficial for reinvesting profits or accessing corporate deductions.
  • S Corporation Election: File Form 2553 to be taxed as an S corp, which can reduce self-employment taxes by paying the owner a reasonable salary and distributing the rest as dividends.
  • Default Sole Proprietorship Status: For most single-member LLCs, profits are reported on Schedule C (Form 1040), similar to a sole proprietor, simplifying the filing process.

In addition to federal taxes, single-member LLCs are often responsible for state income taxes, sales taxes, and self-employment taxes. Proper bookkeeping and quarterly estimated tax payments help avoid penalties.

Issues of Liability

As mentioned, an LLC will protect its members from being held personally responsible for company debts. This is important because it shields owner's private assets during lawsuit judgments. However, in some cases, it's possible for a court to find that an LLC member is responsible for the debts of the company. This is known as piercing the corporate veil.

There are limited conditions when the corporate veil can be pierced. For example, if it is found that a member of the LLC has committed fraud, the veil will be pierced and the member can be held liable. It is much easier for the corporate veil of a single-member LLC to be pierced than it is for a multi-member LLC. If this occurs, the business owner is responsible for all debts and obligations of the LLC.

Protecting Limited Liability Status

Although an LLC provides liability protection, single-member LLC owners must take steps to maintain that protection. Courts may “pierce the corporate veil” if the business is not treated as a separate entity.

To safeguard your limited liability:

  • Keep personal and business finances separate. Use a dedicated business bank account and credit card.
  • Follow state compliance requirements, such as annual reports and fee payments.
  • Sign contracts in the LLC’s name, not your own.
  • Maintain accurate records of all business transactions.
  • Avoid commingling funds or using LLC funds for personal expenses.

If these practices are ignored, creditors or plaintiffs could argue that the LLC is merely an “alter ego” of its owner—resulting in personal liability for business debts.

Managing and Maintaining an LLC With One Member

Ongoing compliance is vital to keeping your single-member LLC in good standing. Common maintenance tasks include:

  • Filing annual or biennial reports with your state’s Secretary of State.
  • Paying state franchise or business privilege taxes where required.
  • Renewing licenses and permits annually.
  • Keeping an updated operating agreement to reflect business changes.
  • Tracking expenses and income for tax reporting and audits.

Some states require publication of LLC formation notices, while others may require periodic business registration updates. Failing to comply with these requirements can result in administrative dissolution or loss of liability protection.

Frequently Asked Questions

  1. Can an LLC have only one member?
    Yes. Every state permits the formation of an LLC with one member. This structure offers personal asset protection and flexible tax options.
  2. Do I need an EIN for a single-member LLC?
    Yes. The IRS requires an Employer Identification Number (EIN) for tax reporting and to open a business bank account—even if there are no employees.
  3. How is a single-member LLC taxed?
    By default, it’s taxed as a sole proprietorship, but you can elect corporate or S corp taxation for different advantages.
  4. Can I pay myself a salary in a single-member LLC?
    The owner typically takes owner’s draws, not a salary, unless the LLC elects S corp status.
  5. How can I protect myself from liability as a single-member LLC owner?
    Keep personal and business finances separate, follow compliance rules, and use contracts in your LLC’s name to maintain your limited liability status.

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