An enterprise that blends elements of the corporation and partnership, where owners, called members, function under an Operating Agreement. Members are not personally liable for debts of the entity, but are personally liable for their own negligence, wrongful acts, or misconduct.
If the LLC has only one member, it may choose to be treated as a corporation, or it will be disregarded as an entity separate from its owner, thereby reporting business activity on Schedule C of Form 1040, in the manner of a sole proprietorship.
If an LLC has two or more members, the IRS defaults to taxing the entity as a partnership, unless it elects be treated as a corporation. In D.C., certain professionals (like lawyers and accountants) who form an LLC must register as a Professional LLC, or PLLC. Registration fees are similar to that of an LLP.
Tax Tip – A single member LLC that has chosen corporate tax treatment, may further elect to be taxed as an S Corporation.