Under default IRS rules, single-member LLC tax treatment is simple: the agency disregards the LLC as separate from its owner, and all business income and expenses flow onto the owner’s personal Form 1040 through Schedule C. The LLC files no federal income tax return of its own. You pay ordinary income tax on the net profit at your individual rate, plus 15.3% self-employment tax, and you send the IRS quarterly estimated payments throughout the year because nothing is being withheld for you. You can opt out of this default by electing to be taxed as a C corporation or an S corporation, but most owners stay with the default.1Internal Revenue Service. Single Member Limited Liability Companies
The Default Rule: Disregarded Entity
Your LLC is a state-level legal structure that shields your personal assets from business debts. The IRS respects that shield for liability purposes but ignores the LLC for federal income tax. The agency calls this “disregarded entity” status, which means you and your LLC are one taxpayer on your 1040.1Internal Revenue Service. Single Member Limited Liability Companies
Every dollar of business income and every deductible business expense goes on Schedule C. The net profit from that schedule carries to your 1040 and is taxed at your ordinary rate. A net loss can offset other income on your return, subject to the usual loss-limitation rules.
This treatment is automatic. You do not elect it, and you do not file anything to receive it. The IRS keeps taxing your LLC this way unless you affirmatively change the classification using Form 8832 or Form 2553.2Internal Revenue Service. LLC Filing as a Corporation or Partnership
Self-Employment Tax
No one is withholding payroll taxes for you, so you owe both halves of Social Security and Medicare yourself. The combined self-employment tax rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare.3Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes) The Social Security portion applies only to the first $184,500 of net earnings for 2026. The Medicare portion has no cap.4Social Security Administration. Contribution and Benefit Base
You do not apply the 15.3% rate to your full net profit. Multiply net earnings by 92.35% first, then apply the rate. That adjustment mirrors the fact that W-2 employees do not pay Social Security or Medicare tax on the employer’s share of their own contributions.5Internal Revenue Service. Topic No. 554, Self-Employment Tax
If your net self-employment income exceeds $200,000 ($250,000 for joint filers), an Additional Medicare Tax of 0.9% applies to earnings above that threshold. It is calculated on Form 8959.6Internal Revenue Service. Topic No. 560, Additional Medicare Tax
You do get a partial break. Half of the self-employment tax you owe is deductible as an adjustment to gross income on Schedule 1 of your 1040. It is not an itemized deduction, so you claim it either way, and it lowers your AGI. Both the tax and the deduction are calculated on Schedule SE.5Internal Revenue Service. Topic No. 554, Self-Employment Tax
Quarterly Estimated Payments
If you expect to owe $1,000 or more in federal tax after subtracting withholding and refundable credits, you generally need to send in quarterly estimated payments using Form 1040-ES. Underpay and the IRS charges a penalty that accrues on the shortfall.7Internal Revenue Service. Estimated Taxes
For 2026 the four due dates are April 15, June 15, September 15, and January 15, 2027. When a deadline lands on a weekend or federal holiday, it moves to the next business day.8Internal Revenue Service. Estimated Tax
You avoid the underpayment penalty if you owe less than $1,000 at filing, or if your payments cover at least 90% of your current-year tax liability or 100% of last year’s tax, whichever is smaller. Most owners base quarterly payments on the prior year to stay safe, then reconcile on the annual return.9Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
What You Actually File
Under the default treatment, your complete federal package includes:
- Form 1040, your individual income tax return
- Schedule C, reporting business income and expenses
- Schedule SE, calculating self-employment tax
- Schedule 1, claiming the deduction for half of self-employment tax
- Form 1040-ES vouchers, sent in quarterly during the year
- Form 8959, if your earnings cross the Additional Medicare Tax threshold
If the LLC has employees, add Form 941 quarterly and Form 940 annually, filed under the LLC’s own EIN rather than your personal name.1Internal Revenue Service. Single Member Limited Liability Companies
Electing Corporate or S-Corp Status
The default suits most single-member LLCs, but it is not the only option. Filing Form 8832 tells the IRS to treat your LLC as a C corporation. The election cannot take effect more than 75 days before you file the form, and no more than 12 months after.10Internal Revenue Service. Form 8832 – Entity Classification Election The LLC then files Form 1120 and pays the 21% corporate rate. Profits you pull out as dividends are taxed again on your personal return, so the same income is taxed twice.2Internal Revenue Service. LLC Filing as a Corporation or Partnership For an owner who takes out most of the profit each year, this rarely wins on the math.
Filing Form 2553 elects S corporation status instead. To apply to the current tax year, it must be filed within two months and 15 days after the tax year begins; later filings take effect the following year.11Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination The LLC must be a domestic entity with one class of stock and only eligible shareholders (no nonresident aliens).12Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined
Under S-corp status, the LLC files Form 1120-S and issues you a Schedule K-1. Profits still flow through to your 1040, so there is no double taxation. The advantage is that only the salary you pay yourself is subject to Social Security and Medicare taxes. The remaining profit, taken as a shareholder distribution, is not.
The IRS knows this incentive and watches for abuse. If you elect S-corp status, you must pay yourself a reasonable salary before taking distributions. Courts have consistently ruled that shareholder-employees who perform more than minor services must be paid what someone in a comparable role would earn. Zero wages combined with large distributions invites reclassification of those distributions as wages, plus back employment taxes and penalties.13Internal Revenue Service. Wage Compensation for S Corporation Officers
Where Your LLC Is Not Disregarded
The disregarded-entity rule applies to income tax. For employment taxes (since 2009) and certain excise taxes (since 2008), the IRS treats the LLC as a separate entity.1Internal Revenue Service. Single Member Limited Liability Companies
If your LLC has employees, the LLC itself files Form 941 for withholding and the employer’s share of Social Security and Medicare, and Form 940 for federal unemployment tax. These forms carry the LLC’s name and EIN, not yours.14Internal Revenue Service. About Form 941, Employer’s Quarterly Federal Tax Return The same is true for excise taxes on fuel, heavy vehicles, wagering, and similar activities: register on Form 637 and pay on Forms 720, 730, 2290, or 11-C under the LLC’s own EIN.1Internal Revenue Service. Single Member Limited Liability Companies
EIN and the W-9 Quirk
A single-member LLC with no employees and no excise tax obligations does not technically need an EIN for federal tax purposes. You can report everything using your Social Security number. Most owners get an EIN anyway because banks require one to open a business account and it keeps your SSN off vendor paperwork.1Internal Revenue Service. Single Member Limited Liability Companies You must get one if the LLC has employees, files excise tax returns, or elects corporate tax status. The IRS issues EINs for free online.15Internal Revenue Service. Get an Employer Identification Number
Here is the quirk that trips people up: when a client sends you a Form W-9, provide your personal SSN or the owner’s individual EIN, not the LLC’s EIN. For income tax reporting, the disregarded entity does not exist. The LLC’s EIN is only for employment and excise tax filings.1Internal Revenue Service. Single Member Limited Liability Companies
Deductions Worth Knowing
Every ordinary and necessary business expense is deductible on Schedule C: advertising, professional services, software, business vehicle costs, supplies, and equipment depreciation. Those deductions reduce net profit, which lowers both income tax and self-employment tax.
The home office deduction requires a space used exclusively and regularly for business. A guest room that doubles as your workspace does not qualify. The simplified method gives you $5 per square foot up to 300 square feet, for a maximum $1,500. The regular method uses actual expenses like mortgage interest, utilities, and insurance. You choose between them on each year’s return, but you cannot switch methods for the same tax year once you file.16Internal Revenue Service. Simplified Option for Home Office Deduction
Section 199A After 2025
Through the end of 2025, single-member LLC owners could deduct up to 20% of qualified business income under Section 199A. The deduction applies to tax years beginning after December 31, 2017, and ending on or before December 31, 2025.17Internal Revenue Service. Qualified Business Income Deduction Unless Congress extends it, the deduction is not available for 2026 returns. If you are filing a 2025 return in 2026, it still applies for that year and is claimed on Form 8995 or Form 8995-A.18Internal Revenue Service. Instructions for Form 8995
Records
Keep records supporting every item of income, deduction, and credit for as long as they could be relevant to a return. The general rule is three years from the filing date. If you understate income by more than 25%, the IRS has six years to assess additional tax, so longer retention is often smart.19Internal Revenue Service. How Long Should I Keep Records At a minimum, hold onto gross receipts, cost of goods sold if applicable, and documentation of every business expense by category: bank statements, invoices, receipts, and mileage logs.20Internal Revenue Service. Topic No. 305, Recordkeeping
State Taxes Are Separate
Federal treatment is only part of the picture. Most states impose their own income tax on LLC profits, and many require an annual report or franchise tax to keep the LLC in good standing. Fees range from nothing to several hundred dollars depending on the state, and a few states impose a separate LLC tax regardless of earnings. Check with your state’s secretary of state and department of revenue, because losing good standing over a missed annual filing can jeopardize the liability protection the LLC was set up to provide.