The four types of LLC are the single-member LLC, the multi-member LLC, the series LLC, and the professional LLC (PLLC). All four give you the same core benefit — a legal wall between your personal assets and the business’s debts — but they differ in who can own them, how the IRS taxes them, and what kinds of businesses they fit. Which one you need comes down to three questions: How many owners are involved? Do you hold a professional license? And do you want to isolate multiple ventures under a single umbrella?
Single-Member LLC
A single-member LLC has one owner. By default, the IRS treats it as a “disregarded entity,” meaning the business doesn’t exist as a separate taxpayer for income tax purposes.1eCFR. 26 CFR 301.7701-3 – Classification of Certain Business Entities You report business income and expenses on your personal return, usually on Schedule C of Form 1040.2Internal Revenue Service. Single Member Limited Liability Companies There’s no separate business income tax return.
The legal protection stays fully intact. A creditor who sues the business can reach business assets but generally cannot touch your home or personal accounts. That wall only holds if you treat the two as separate. Commingle funds, skip basic recordkeeping, or sign contracts in your own name instead of the LLC’s, and a court can “pierce the veil” and hold you personally responsible.
Self-Employment Tax
Business income from a single-member LLC counts as self-employment income, so you owe both the employer and employee halves of Social Security and Medicare taxes. The combined rate is 15.3% — 12.4% Social Security and 2.9% Medicare. The Social Security portion applies only to the first $184,500 of net earnings in 2026; the Medicare portion has no cap.3Social Security Administration. Contribution and Benefit Base You can deduct the employer-equivalent half when figuring your adjusted gross income.4Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
EIN and Employment Taxes
Even though the IRS ignores the LLC for income tax, it treats the business as a separate entity for employment taxes and certain excise taxes. If you hire employees, the LLC needs its own Employer Identification Number and must report and pay employment taxes under the LLC’s name, not yours.2Internal Revenue Service. Single Member Limited Liability Companies “Disregarded” doesn’t mean the LLC skips a federal ID number entirely.
Multi-Member LLC
When two or more people own the LLC together, it’s a multi-member LLC. The IRS defaults these to partnership taxation, so the LLC itself pays no federal income tax.5Internal Revenue Service. LLC Filing as a Corporation or Partnership The business files an informational return on Form 1065, and profits and losses pass through to each member’s individual return.6Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income This sidesteps the double taxation that C-corporations face.
Each member receives a Schedule K-1 showing their share of income, deductions, and credits for the year. Members don’t file the K-1 with their returns but use it to report the right amounts.7Internal Revenue Service. Partner’s Instructions for Schedule K-1 (Form 1065) The LLC must provide the K-1 by its own filing date, March 15 for calendar-year filers.
The Operating Agreement
The operating agreement is the internal rulebook. It covers ownership percentages, how profits and losses are split, voting rights, what happens when a member leaves, and how disputes get resolved. Most states don’t legally require a written agreement, but running a multi-member LLC without one is reckless. State default rules fill in the gaps otherwise, and those defaults rarely match what the owners actually intended. Courts lean heavily on operating agreements when members fight, and nothing in writing almost guarantees a messier, costlier outcome.
Profit-sharing doesn’t have to mirror ownership percentages. An LLC can allocate a larger share to a member who contributes more labor or specialized expertise, as long as the allocation meets IRS economic-effect requirements. That flexibility is one of the LLC’s clearest advantages over a corporation, where distributions generally track share ownership.
Series LLC
A series LLC is a single master entity that can create separate internal divisions, called “series,” each with its own assets, members, and liability protection. A lawsuit or debt tied to one series can only reach the assets in that series. The other series and the master entity are shielded. Real estate investors use this structure to hold each property in its own series so a liability event at one property doesn’t threaten the rest of the portfolio.
Roughly 20 states and territories currently authorize series LLCs. That limited availability creates a real problem: if you form a series LLC in one state and do business in a state that doesn’t recognize the structure, there’s no guarantee a local court will respect the liability walls between your series. This is the biggest risk, and the reason many attorneys recommend separate traditional LLCs for true isolation when a business crosses state lines.
Keeping the Internal Shield Intact
The liability protection between series isn’t automatic. Each series must keep its own financial records and bank accounts, separate from the master LLC and every other series. The master LLC’s formation documents must include notice that the series structure limits liability. Get sloppy with the separation — mix money or records between series — and a court can treat them as one entity and reach all assets to satisfy a judgment against any individual series. The recordkeeping burden multiplies with each series, so the savings over forming separate LLCs are smaller than they first look.
Professional LLC (PLLC)
A professional LLC is for people who hold state-issued professional licenses: doctors, lawyers, accountants, architects, engineers, dentists, and similar practitioners. Many states prohibit these professionals from forming a standard LLC and require a PLLC instead. Formation typically requires submitting proof of licensure, and every member of the PLLC must hold the appropriate license. Some states require the business name to include “PLLC” so the public knows it’s dealing with a professional entity.
What a PLLC Shield Does and Doesn’t Cover
The liability protection in a PLLC works differently from a standard LLC, and the difference matters. A PLLC shields you from general business debts like lease obligations and supplier invoices. It also shields you from another member’s professional mistakes. If your law partner commits malpractice, the PLLC structure can keep that claim from reaching your personal assets.
A PLLC does not protect you from your own professional negligence. A surgeon who makes a surgical error, a lawyer who misses a filing deadline, an accountant who botches a tax return — each remains personally liable regardless of the business structure. No state allows the LLC shield to sever the link between a licensed professional and their own conduct, because doing so would undermine the entire licensing system. Malpractice insurance is essential for every member of a PLLC.
How to Pick the Right One
Start with headcount and license status. One owner, no professional license: a single-member LLC. Two or more owners, no license: a multi-member LLC. Licensed profession, whether solo or with partners: a PLLC, and often you have no other option under state law. Multiple properties or ventures you want walled off from each other, formed and operated in a state that recognizes the structure: a series LLC worth discussing with an attorney, with the cross-state recognition risk front of mind.
Changing Your LLC’s Tax Classification
Whichever type you form, you’re not stuck with the default tax treatment. The IRS lets LLCs elect a different classification, and that’s where most real tax planning happens.
S-Corporation Election
An LLC can elect S-corporation taxation by filing Form 2553.8Internal Revenue Service. Instructions for Form 2553 The main draw is self-employment tax savings. Under default LLC taxation, all business profit is subject to self-employment tax. Under an S-corp election, you split your income into a reasonable salary (subject to payroll taxes) and distributions (not subject to them). If your LLC earns well above a reasonable salary for the work you do, the savings on the distribution portion can be meaningful.
The catch is that the salary has to be “reasonable,” and the IRS actively audits S-corps that pay owner-employees little or nothing. You can’t pay yourself $20,000 and take $200,000 in distributions. The election also comes with restrictions: no more than 100 shareholders, only U.S. resident individuals and certain trusts as owners, and one class of ownership interest.8Internal Revenue Service. Instructions for Form 2553 Form 2553 must be filed no later than two months and 15 days after the beginning of the tax year the election is to take effect.
C-Corporation Election
An LLC can also elect C-corporation taxation using Form 8832.9Internal Revenue Service. About Form 8832, Entity Classification Election This is less common because it introduces double taxation: the LLC pays corporate income tax on profits, and members pay again on distributions. It can make sense for businesses that plan to reinvest most profits rather than distribute them, or for companies seeking venture capital, where investors expect a corporate tax structure. Unlike the S-corp election, there are no restrictions on the number or type of owners.