A single member limited liability company is a limited liability company consisting of one owner, known as a member. Although some states do not allow it, Pennsylvania permits the formation of a single member limited liability company. Unless the member elects otherwise, a single member limited liability company is taxed as a sole proprietorship.
- No personal liability for the company’s member. Commonly referred to as a “limited liability entity”
- The entity is known as a “pass-through entity” as the income passes directly to the members, avoiding the double taxation pitfall associated with “C” Corporations
- Flexible governance and organizational requirements:
- No restriction on types of owners or creating varying member classes
- Able to utilize multiple ownership classes with varying voting and income rights
- All earnings subject to self-employment tax
- No taxable difference between member “wage” payments and company distributions to members
- Impact dependent on projected revenues
- Less formalities, which may cause difficulties with transferability of ownership
We believe that you need a great team, starting with a great account. Forming a company involves tax matters that our law firm does not handle. You should confirm with your account or tax professional on an entity choice before forming an entity.