Key Takeaways

  • A single-member LLC is a limited liability company with one owner, offering liability protection and flexible tax treatment.
  • The Articles of Organization (also called a Certificate of Formation or Certificate of Organization in some states) is the official state document that creates your LLC.
  • Filing requirements for the Articles vary by state but usually include the LLC name, address, registered agent information, and management structure.
  • Some states restrict certain professions from forming a standard single-member LLC, requiring a Professional LLC (PLLC) or other structure.
  • The IRS treats most single-member LLCs as “disregarded entities” for tax purposes unless you elect corporate taxation.
  • To maintain liability protection, you must follow proper LLC formalities, keep business and personal finances separate, and comply with state annual filing requirements.

The single-member LLC articles of organization is a document that you need to file with the state when forming your LLC.

LLC stands for limited liability company, and it is a business structure that state law allows you to form. They can be owned by multiple people, one single individual, a corporation, or other LLCs. A single-member LLC has special consideration, however, since it is a one-owner company.

What To Know About Single-Member LLCs

When a single business owner decides to create an LLC, the business entity becomes separate from its owner. There are several advantages to creating an LLC as a single owner:

  • The owner is protected from being liable for debts and other obligations incurred by the business.
  • Single-member LLCs have more credibility as a legitimate business than sole proprietorships.
  • The name of a registered LLC is protected and cannot be used by any other business within its state.
  • Unlike corporations, LLCs do not need to have shareholders, boards of directors, or formal meetings. They can do so if they choose, however.
  • You can be the LLC's sole director and officer as well as the only owner.

Beware of web-based legal services which tell you that many LLC forms, such as an operating agreement, are required to keep your LLC protected from liability. You do not need an operating agreement, though it's still a good idea to create one.

State Restrictions and Professional LLC Requirements

While every state allows a single-member LLC, some professions—such as law, medicine, accounting, architecture, and engineering—face restrictions or must form a Professional Limited Liability Company (PLLC) instead. A PLLC typically requires:

  • Proof of a valid state professional license.
  • Approval from the relevant licensing board before formation.
  • Compliance with any malpractice insurance requirements, as PLLC liability protection does not extend to professional negligence.

Certain industries like banking and insurance generally cannot form LLCs or PLLCs and must choose different structures. The exact rules vary by state, so it’s important to review your jurisdiction’s regulations before filing.

Management Structure of Single-Member LLCs

LLCs can choose between member-managed and manager-managed structures, even if the LLC has only one member. If this is not specifically indicated in the articles of organization or operating agreement, the state assumes you will be a member-managed LLC.

Member-managed LLCs are managed by owners, or in the case of a single-member LLC, the single owner. Manager-managed LLCs are managed by a formally appointed manager who is different from the owner. This manager is given authority to deal with the LLC's daily operations such as hiring and firing workers, writing checks to suppliers, and signing contracts or leases. Owners still have higher authority for many decisions, however.

Most single-member LLCs are managed by the owner. However, there may be some circumstances under which it's preferable to have a separate manager.

Steps to Creating a Single-Member LLC

The first step of creating a single-member LLC is to file the company's articles of organization, which is also referred to as a certificate of organization. This will require a filing fee as well as the form. The state will then process your application and will mail your certificate of formation by USPS mail.

Once this is complete, be sure to open a separate bank account for your LLC. Do not under any circumstances use your personal bank account for business purposes. In order to do this you will need a federal tax ID number, also called an employer ID number (EIN). This is necessary even if you do not plan to hire employees since it serves the same purpose as a social security number for your business. It's free, and a simple process.

Required Information in the Articles of Organization

The Articles of Organization are your LLC’s foundational document and must be filed with the appropriate state agency—usually the Secretary of State. Although formats differ by state, they typically require:

  • LLC Name – Must meet state naming requirements and be distinguishable from existing entities.
  • Principal Business Address – The LLC’s main office location.
  • Registered Agent – An individual or company authorized to receive legal documents on the LLC’s behalf.
  • Management Structure – Whether the LLC will be member-managed or manager-managed.
  • Purpose Statement – Some states require a brief description of the LLC’s business activities.
  • Duration – Indicate if the LLC is perpetual or has a set end date.

Additional state-specific provisions may include the names of members/managers, liability clauses, or organizer signatures. Filing fees and processing times also vary.

Paying Taxes as a Single-Member LLC

Single-member LLCs have simpler tax filing than other types of business such as corporations or LLCs with multiple managers. The IRS considers single-member LLCs to be “disregarded entities” which means that it treats them like sole proprietorships. The business does not need to file its own tax return. Instead, all of the income and expenses will be reported on the single owner's tax return using Schedule C.

Even though it is not recognized by the IRS, forming a single-member LLC does have advantages over a sole proprietorship. Unlike a corporation, LLCs avoid double taxation of profits. However, they can choose to be taxed as a corporation if it is more beneficial.

IRS Classification and Tax Elections

By default, the IRS classifies a single-member LLC as a disregarded entity, meaning the LLC does not file a separate federal return; instead, income and expenses are reported on the owner’s personal return (Schedule C, E, or F).

However, you can elect to have your LLC taxed as a C corporation or S corporation by filing Form 8832 (Entity Classification Election) or Form 2553 (Election by a Small Business Corporation). Choosing corporate taxation can sometimes reduce self-employment taxes or provide other benefits, but it also introduces additional filing requirements.

Single-member LLC owners must also comply with state-level tax obligations, which may include franchise taxes, annual report fees, or industry-specific levies.

Protection From Liability

One of the best reasons to form an LLC is the protection it offers from personal liability. LLC members are protected from most debts that the business incurs. That means if your business is sued or owes a debt, creditors cannot come after your personal assets.

However, there are limitations to this protection, especially for single-member LLCs. It mainly protects owners from contract issues, such as when the business cannot fulfill the terms of a contract, and from the actions of another owner. With single-owner LLCs, the second item does not apply. LLC owners may still be held liable for lawsuits that are caused by their own actions or negligence.

Maintaining Liability Protection

Although a single-member LLC shields your personal assets from most business debts, this protection is not absolute. Courts can “pierce the corporate veil” if you fail to maintain the LLC as a separate legal entity. To preserve liability protection:

  • Keep separate business and personal bank accounts.
  • Sign contracts and other documents in the LLC’s name, not your personal name.
  • File required annual or biennial reports with the state.
  • Maintain accurate and complete financial records.
  • Avoid commingling personal and business funds.

Failing to follow these formalities can weaken your LLC’s liability shield and expose personal assets in lawsuits or debt collection actions.

Frequently Asked Questions

  1. What is the purpose of the Articles of Organization?
    They are the official state document that legally forms your LLC, outlining its name, structure, registered agent, and other key details.
  2. Can any business form a single-member LLC?
    Most can, but certain licensed professions may need to form a PLLC or another entity type, depending on state law.
  3. How much does it cost to file the Articles of Organization?
    Fees vary by state, typically ranging from $50 to $500, plus potential annual report fees.
  4. Does a single-member LLC need an EIN?
    Yes, in most cases—especially if you plan to open a business bank account or hire employees. It’s free from the IRS.
  5. Can I change my LLC’s tax classification later?
    Yes. You can elect corporate taxation at formation or later by filing the appropriate IRS forms.

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