A limited liability company (LLC) with only one owner, often referred to as a member, is referred to as a single-member LLC. Because it offers the same liability protection as a conventional LLC with less red tape and formality, this sort of LLC is a popular option for small business owners and entrepreneurs.
Consequently, how is a single-member LLC taxed? A single-member LLC is taxed by default as a disregarded entity, which means that the owner’s personal tax return must include the business’s revenues and losses. However, if the owner would want, the LLC might be taxed as a S corporation or a corporation.
A single-member LLC is created to shield the owner’s personal assets from the company’s obligations. This indicates that the owner’s personal assets, such as their home or car, are not at danger in the event that the LLC is sued or accrues debt. Additionally, compared to a sole proprietorship, a single-member LLC gives the owner more flexibility and control over the operations and decisions of the business.
You can add a new member to an existing single-member LLC in Washington State by filing an amendment to your articles of incorporation with the Washington Secretary of State. Name, address, and phone number of the new member are required, along with their ownership stake in the LLC.
And last, LLC or sole proprietorship—which is preferable? Both LLCs and sole proprietorships have advantages, but because an LLC offers liability protection and isolates the assets of the firm from the owner’s personal assets, it is typically thought to be a superior choice for small business owners. An LLC can also have several members, which can increase flexibility and possibly open up more funding options.
In conclusion, Washington State permits single-member LLCs, which have a number of advantages for small business owners. Compared to conventional LLCs, they offer liability protection, flexibility, and fewer formalities. To be sure you’re choosing the best option for your company, it’s advisable to speak with a lawyer or business counselor if you’re interested in setting up a single-member LLC or have questions regarding the procedure.