Single Member LLC Definition
A Single Member LLC definition is a limited liability company with one member. It’s a type of entity that has caught on across the United States. It was created to satisfy emerging needs from the rapidly changing business world. One example of this is the owner/member requirements of limited liability companies. The owners are often not required to be individuals, citizens, or a specific type of business. This gives more flexibility to single member limited liability companies as well as conventional limited liability companies.
One LLC variable that varies from state to state is whether a husband and a wife can own a single member LLC. Some states allow this, while others prohibit it. As you can see, many questions and possibilities arise when forming this type of entity. If you are unsure, then seek professional advice to make sure that you are fully protected and acting within the law.
Why File For a Single Member LLC
LLCs have been very widespread since their invention. There are many different advantages of having an limited liability company. One of the broad advantages is the flexibility of taxes. Determine whether you want your LLC profit to flow-through to your personal income or whether it will be taxed as a corporation. The limited liability that this structure offers its members is another large advantage. LLCs’ liabilities are separate from the members as long as the corporate veil stays intact. One more significant benefit of limited liability companies is the ease of formation and lack of upkeep. LLCs have less stringent requirements than corporations and are faster, cheaper entities to form.
Things to Consider First
If you’ve decided that an LLC or single member LLC is right for your business, then consider the following questions:
- Will you be reinvesting a majority of profits into the business? If so, consider opting to be taxed as a corporation.
- Are you going to do business internationally?
- Is the single member LLC for you?
- Are there multiple owners? Is your operating agreement thorough enough?
- What are your state’s laws regarding LLCs?
Originally posted by Jim Wilkinson on June 6, 2014.