Quick answer
By default, the IRS treats a single-member LLC as a disregarded entity. It doesn’t file its own income tax return or pay its own federal income tax. You report the profit on Schedule C of your personal Form 1040, exactly like a sole proprietor.
You pay income tax at your personal rates and 15.3% self-employment tax on 92.35% of net profit. You can usually take the 20% QBI deduction and must make quarterly estimated payments.
You can change this by electing to be taxed as an S-corp (Form 2553) or a C-corp (Form 8832). State taxes and fees apply separately.
How the IRS classifies a single-member LLC
An LLC is a state-law entity. The IRS has no “LLC” tax category, so it assigns one:
| Number of owners | Default federal tax treatment | Main federal form |
|---|---|---|
| One | Disregarded entity (like a sole proprietor) | Schedule C with Form 1040 |
| Two or more | Partnership | Form 1065 and K-1s |
| Any, with election | S-corp or C-corp | Form 1120-S or Form 1120 |
A married couple in a community property state who own an LLC together can generally choose to treat it as a disregarded entity or a partnership.
The LLC still exists for legal purposes. It protects your personal assets from business liabilities, but that doesn’t change the tax math.
The taxes you pay
Income tax
Your LLC profit adds to your other income on Form 1040. It’s taxed at your ordinary rates after the 2026 standard deduction ($16,100 single, $32,200 married filing jointly) and any QBI deduction.
Self-employment tax
You pay Social Security and Medicare on your own profit through Schedule SE: 12.4% Social Security on net earnings up to $184,500 in 2026, plus 2.9% Medicare on all of it. An extra 0.9% Medicare tax applies above $200,000 (single). You deduct half of SE tax on your 1040. See Self-Employment Tax Explained.
QBI deduction
Most single-member LLCs qualify for the 20% qualified business income deduction, made permanent in 2025. Limits apply at higher incomes, especially for service businesses. See QBI Deduction.
State taxes and fees
Your state may tax the income and charge LLC-level fees. Examples: California’s $800 annual tax, Texas franchise tax reports, and annual report fees in most states.
Worked example: $70,000 of profit
Sam, single, runs a copywriting business as a single-member LLC. His 2026 revenue is $85,000 with $15,000 of expenses, for $70,000 of net profit. He has no other income.
| Step | Amount |
|---|---|
| Net profit (Schedule C) | $70,000 |
| SE tax: $70,000 × 92.35% × 15.3% | $9,891 |
| Deduction for half of SE tax | -$4,945 |
| Adjusted gross income | $65,055 |
| Standard deduction | -$16,100 |
| QBI deduction (limited to 20% of taxable income) | -$9,791 |
| Taxable income | $39,164 |
| Federal income tax | $4,452 |
| Total federal tax | $14,342 (about 20.5% of profit) |
The LLC itself pays nothing federally. Sam pays it all on his personal return, ideally through four quarterly estimated taxes of about $3,586.
Forms and IDs
- Schedule C: income and expenses. See How to Fill Out Schedule C.
- Schedule SE: self-employment tax.
- Form 1040-ES: estimated payments.
- Form 8829: if you claim a home office with the regular method.
- EIN: not required for income tax if you have no employees, but required for payroll and excise taxes. The IRS says a single-member LLC must use its own EIN for employment tax reporting. Most banks want one anyway.
- W-9: use the LLC name on line 2 and your own name on line 1, and check “Individual/sole proprietor” (not the LLC box), because the LLC is disregarded. See How to Fill Out a W-9.
Paying yourself
You don’t take a salary from a disregarded LLC. You transfer money from the business account to your personal account as an owner’s draw. Draws aren’t deductible and aren’t taxed separately: you pay tax on the profit whether you take it out or not. See How to Pay Yourself as a Sole Proprietor.
When to consider an S-corp election
Once net profit is steady at roughly $60,000 to $80,000 or more, an S-corp election may cut self-employment tax. You’d pay yourself a reasonable salary through payroll and take the rest as distributions. The trade-off is added costs of about $1,500 to $3,000 a year. See our article LLC vs S-Corp for Freelancers: When Does It Save You Money?
What about BOI reporting?
Single-member LLCs formed in the US and owned by US persons don’t file beneficial ownership reports. FinCEN’s March 2025 interim final rule exempted domestic companies, and an August 2026 final rule made the change permanent.
Frequently asked questions
Does a single-member LLC file a separate tax return?
Not for federal income tax by default. The profit goes on your Form 1040 through Schedule C. Some states require an LLC-level return, such as California’s Form 568.
Does an LLC lower my taxes?
Not by itself. A default single-member LLC is taxed the same as a sole proprietorship. Savings come only from an S-corp election or from deductions available to any business.
Do I need an EIN for my single-member LLC?
Only if you have employees, file excise taxes or elect corporate status. Many owners get one anyway because it’s free and banks ask for it.
Can my LLC deduct health insurance?
You deduct it on your personal return through the self-employed health insurance deduction, if you qualify.
This article is general information, not tax advice. Consult a CPA or Enrolled Agent for your situation.
Related guides
- Cheapest States to Form an LLC (and Why It May Not Matter)
- Do I Need a Registered Agent for My LLC?
- How to Start an LLC in Texas
- How to Start an LLC in California
About this guide
Written by the Freelancer Tax HQ editorial team, based on our professional experience, official US government sources (IRS, SSA and other agencies) and reputable informational articles listed in the sources below. Last reviewed on . Tax rules change often, and we update this guide when they do. Read our editorial policy or report an error.
Sources
IRS: Single Member Limited Liability Companies; IRS: LLC filing as a corporation or partnership; SSA: Contribution and Benefit Base; California FTB: Limited Liability Company; FinCEN: BOI reporting. Example figures are FreelancerTaxHQ illustrations.
Official resources linked in this guide: IRS: Self-Employment Tax; IRS: Tax preparer credentials; IRS: About Form W-9; IRS: Estimated Taxes; IRS Instructions for Schedule C; Instructions for Form 2553; Instructions for Form 8829; IRS: S Corporations.