Hi! I'm Dane Carlson, and welcome to the Business Opportunities Weblog. I've been publishing this website, by myself, and sometimes with the help of others for over twelve years now. You'll notice two things about this site right away:
For tax purposes, the LLC is treated as a sole proprietorship when there is one owner and as a general partnership when there are two or more owners. Neither the sole proprietorship nor the general partnership is a taxpaying entity. They are termed “pass-through entities,” or conduits. The owners report their share of profit and loss (whether or not it is actually distributed) on their personal income tax returns.
The owner of a one-owner LLC must fill out Schedule C and add it to his or her personal income tax return (Form 1040); members of a multiple-owner LLC must use Schedule E with their returns. A multiple-member LLC also must file a partnership information return, Form 1065, which shows how the money came in and was distributed to members, but no entity-level taxes are imposed. “Salary” to the owner of an LLC is really just a way of dividing profits, or an owner’s withdrawal in a one-owner LLC (see our discussion covering the different ways of dividing profits in the LLC).