A Limited Liability Company with only one owner (member). It offers liability protection and flexible taxation—usually treated as a “disregarded entity” for U.S. tax purposes by default.
What is a Single-Member LLC?
A Limited Liability Company with only one owner (member). It offers liability protection and flexible taxation—usually treated as a “disregarded entity” for U.S. tax purposes by default.
A Single-Member LLC (SMLLC) is a Limited Liability Company that has only one owner, known as the member. It is one of the most common and flexible business structures in the United States, especially for solo entrepreneurs, freelancers, and foreign founders looking to do business in the U.S.
From a legal standpoint, a Single-Member LLC offers limited liability protection, meaning the owner’s personal assets are generally protected from business debts and lawsuits. However, this protection only holds if the LLC is properly maintained—such as keeping separate bank accounts and following basic compliance rules.
From a tax perspective, an SMLLC is treated as a “disregarded entity” by default. This means it is not taxed as a separate entity; instead, its income and expenses are reported directly on the owner’s personal tax return. For U.S. owners, this is typically done on Schedule C of their Form 1040. For non-U.S. owners, taxation depends on whether the LLC has “effectively connected income” (ECI) with a U.S. trade or business. In many cases, non-resident owners of SMLLCs without U.S. source income may have no U.S. tax filing obligation, though Form 5472 with a pro forma 1120 is still required annually if there are reportable transactions.
The SMLLC structure is especially popular in states like Wyoming, Delaware, and New Mexico, due to their low fees, privacy protections, and business-friendly laws. Wyoming is often favored by non-U.S. entrepreneurs for its low annual costs, while Delaware is preferred by startups planning to raise capital or scale rapidly.
Key benefits of a Single-Member LLC include:
- Easy to form and manage, with fewer formalities than corporations. Unlike corporations, which require strict formalities like shareholder meetings, a board of directors, and detailed corporate resolutions, a Single-Member LLC is much more straightforward. There’s no requirement to issue stock or maintain complex internal governance. In most states, forming an SMLLC simply involves filing a Certificate of Formation (or Articles of Organization) and paying a state fee. Ongoing maintenance is generally limited to filing an annual report and paying a small fee (depending on the state). Additionally, while it’s not legally required in all states, most advisors recommend creating an Operating Agreement, even for a Single-Member LLC. This internal document outlines how the LLC will be managed, how decisions are made, and what happens in the event of closure or ownership transfer. Even with only one member, having a signed Operating Agreement can strengthen the business’s limited liability shield and may be requested by banks or investors.
- Can elect to be taxed as a corporation if preferred. By default, a Single-Member LLC is treated as a “disregarded entity” for federal tax purposes, meaning the owner reports all income and expenses directly on their personal tax return (or is taxed on U.S. income if they’re a non-resident). However, the LLC can elect to be taxed as a C Corporation by filing Form 8832, or as an S Corporation if the owner is a U.S. person and qualifies. This flexibility gives LLC owners the ability to optimize taxes based on their income, growth plans, or need to reinvest profits in the business. For non-U.S. residents, remaining a disregarded entity is often beneficial, but electing corporate taxation can be useful if the business will operate fully in the U.S. and benefit from a flat 21% federal corporate tax rate.
- Shields the owner’s personal assets from business liabilities. One of the core advantages of an LLC structure is limited liability. This means that, in most cases, if the business is sued or incurs debt, the owner’s personal assets—such as bank accounts, cars, or homes—are protected. Creditors can only go after the business’s assets. This protection depends on properly maintaining the LLC as a separate legal entity—keeping finances separate, using an Operating Agreement, and following basic legal formalities.
This makes a Single-Member LLC ideal for anyone seeking to protect personal wealth while operating a U.S. business—whether as a consultant, freelancer, online seller, or startup founder. - Some states allow anonymous ownership through Registered Agents.Some U.S. states allow for anonymous LLC ownership, meaning the name of the owner (member) is not publicly listed on the Secretary of State’s website. Instead, only the Registered Agent’s information appears in public records. This adds a layer of privacy, which can be especially valuable for non-U.S. founders, high-profile individuals, or asset protection purposes. States known for strong privacy protections include:
New Mexico: Doesn’t require member names in public filings or annual reports.
Wyoming: Allows anonymous ownership and has minimal annual fees and no state income tax.
Delaware: Requires minimal disclosures and is widely used by startups and holding companies.
In these states, it’s common to use a Registered Agent service to maintain privacy and compliance, especially if the owner is located abroad.
However, it’s worth noting that not all states treat SMLLCs the same. For example, California imposes an $800 annual franchise tax even on inactive LLCs, while other states like Wyoming have no income tax and low annual reporting requirements.
In summary, a Single-Member LLC is ideal for solo founders—whether U.S.-based or international—who want liability protection, tax simplicity, and a flexible legal structure to operate or hold assets in the U.S.
