2023-11-18
Taxation of Multi-Member LLCs and Their Members
Jacob Miller
Discover how multi-member LLCs and their members are taxed, including the default tax status, distribution of profits, and state-specific nuances.
An LLC, or Limited Liability Company, is a popular business structure that combines the limited liability protection of a corporation with the pass-through taxation of a partnership. Forming an LLC is a common choice for small businesses and startups due to its flexibility and protection it offers to its members.
For individuals looking to form an LLC with multiple members, understanding how they will be taxed is crucial. In a multi-member LLC, the members are taxed differently than in a single-member LLC.
Taxation of Multi-Member LLCs and Their Members
In a multi-member LLC, the default tax status is that of a partnership. This means that the profits and losses of the LLC