LLC Tax Classification

LLC tax classification refers to how a Limited Liability Company (LLC) is taxed by the IRS. By default, a single-member LLC is treated like a sole proprietorship, and a multi-member LLC like a partnership—meaning profits and losses pass through to owners’ personal tax returns. Alternatively, an LLC can choose to be taxed as a corporation (either S corp or C corp), which can offer different benefits and liabilities. This classification impacts how the LLC reports income, pays taxes, and handles deductions, giving owners flexibility to select the most advantageous tax structure for their business.