For tax purposes, Is it better to file a LLC as a single owner or have a partnership? For example, add a spouse as Co-Owner of a business or be the single owner. How is liability impacted between single owner LLC and partnership LLC?

Get Legal Help Today

Compare Quotes From Top Companies and Save

secured lock Secured with SHA-256 Encryption

For tax purposes, Is it better to file a LLC as a single owner or have a partnership? For example, add a spouse as Co-Owner of a business or be the single owner. How is liability impacted between single owner LLC and partnership LLC?

Single owner LLC is a ‘disregarded entity’ but how is liability impacted?
Is there any advantage in filing as LLC with 2 members vs single-owner LLC?

Asked on January 30, 2018 under Business Law, Virginia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

There is no tax distinction between single owner and multiple owner LLCs, assuming you select "disregarded entity" or "pass through" tax treatment when you form the LLC. (You have the right to have your LLC taxed as a corporation, but I'm not sure why any small business person would do that.) In either event, the LLC profits "pass through" and "disregard" the LLC and drop directly to the owners' ("members") income and are taxed with their other income. Each owner would get a share of LLC profits (or losses, tax-loss or deduction purposes) equal to his or her share or percentage of ownership.
 


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

Get Legal Help Today

Find the right lawyer for your legal issue.

secured lock Secured with SHA-256 Encryption