Single Member LLC

LLCs and corporations  Today TaxMama® hears from Sheronda in the TaxQuips Forum, with this question – which is more common than you might think. She read this on the Delaware website “Single-member Delaware LLCs are “disregarded entities” according to IRS regulations, which means they have no U.S. income tax and no reporting due.” And asks, “Does this mean, that if I am a single member LLC in the State of DE, that I do not have to file taxes for my LLC?”

 

 

Hi Sheronda,

It makes no difference what the nice folks in Delaware say about reporting. If there is ANY LLC, it must file tax returns per the IRS requirements. And if the LLC has nexus in another state (like PA), it will need to file in PA as well.

If this is a one-person owner LLC, ‘disregarded entity’ means it reports its income/expenses on the owner’s personal tax return, on Schedule C.

Frankly, it is useless to have a Delaware, Wyoming, Nevada (or other tax-free state) LLC or corporation when the business is not being operated in one of those states. The entity must still register with the Secretary of State where the business is being operated. And must file all relevant income and sales tax (and possibly) payroll tax returns in that state.

Does this make sense to you? Please read Chapter 12 in Small Business Taxes Made Easy for more details.

And remember, you can find answers to all kinds of questions about LLCs and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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