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I’m a (GASP!) Disregarded Entity?!

Filling out tax forms for the single-member LLC is tricky. LLCs are pass-through entities, like partnerships. But they are not taxed like partnerships because there is only one owner, not two or more partners. For the IRS, the LLC is classified as “other.” It is a disregarded entity for IRS/tax purposes.

This often scares business owners who formed a limited liability company expressly for limited liability. Relax – you have limited liability. This means as long as your company is properly formed, properly maintained and properly capitalized, you will only risk your initial capital contribution.

To be a disregarded entity for tax purposes means the LLC does not have to file a tax return for the business itself – the single owner files a Schedule C on his or her personal return instead of filing a tax return for the business.

This will come into play if you apply for an EIN or fill out a W9.

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