Check my answer.Can a sole proprietor form as a single-member limited liability company (LLC)? If so, how would such an LLC be taxed?Under the check-the-box Regulations, an unincorporated entity with only one owner can file as an LLC and would be classified as a disregarded entity. LLC’s do not typically pay federal income taxes, but the LLC would need to report and pay employment and excise taxes.

Internal Revenue Service has classified the businesses as : Sole proprietorship S corporation C…

Answered: Can a sole proprietor form as a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Can a sole proprietor form as a single-member limited liability company (LLC)? If so, how would such an LLC be taxed?

Under the check-the-box Regulations, an unincorporated entity with only one owner can file as an LLC and would be classified as a disregarded entity. LLC’s do not typically pay federal income taxes, but the LLC would need to report and pay employment and excise taxes.

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Step 1

Internal Revenue Service has classified the businesses as :

Sole proprietorship
S corporation
C corporation

Each of them has eligibility for different type of deductions and exemptions and different return submission requirements and related relaxations.

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