Single-Member LLC Taxes, Explained

Forming a single-member LLC changes your legal position and changes almost nothing about your taxes. That surprises new owners who expected the LLC to file its own return, pay its own tax, or somehow lower the bill. By default it does none of those things. The IRS looks straight through the LLC to you, and you pay exactly what you would have paid as a sole proprietor: income tax on the profit plus 15.3% self-employment tax on most of it.

What the LLC does give you is a set of choices you did not have before, and a short list of state obligations that are easy to miss. Here is how a single-member LLC is taxed by default, what the numbers look like on a real profit figure, when electing S corporation status starts to make sense, and what Florida wants from you even though it has no income tax.

Disregarded by default: what that actually means

A domestic LLC with one owner is a "disregarded entity" for federal income tax unless it elects otherwise. The IRS's own description is that the LLC's activities are reported on the owner's return: Schedule C for an operating business, Schedule E for rentals, Schedule F for a farm. There is no separate business return, no partnership form, and no corporate tax. Net profit from Schedule C flows to Form 1040 and is taxed at your personal rates alongside any W-2 wages in the household.

Two things are not disregarded. Employment taxes are one: if the LLC has employees, it files Forms 941 and 940 and issues W-2s under its own name and EIN, not yours. Excise taxes are the other. And although the IRS says you may use your Social Security number if you have no employees, every bank and payment processor will want an EIN, and it keeps your SSN off paperwork. Get one; it is free and takes minutes online.

Self-employment tax, estimated payments and the QBI deduction

The tax that catches new LLC owners is not income tax; it is self-employment tax, which replaces the Social Security and Medicare taxes an employer would otherwise split with you. It is computed on Schedule SE at 15.3% of 92.35% of net profit: 12.4% for Social Security on earnings up to $184,500 in 2026, plus 2.9% for Medicare with no cap. An additional 0.9% Medicare tax applies above $200,000 of combined wages and self-employment income for single filers, $250,000 for joint filers. Half of the self-employment tax is deductible on Form 1040, which lowers income tax but not the SE tax itself.

Because nothing is withheld, you pay as you go. The 2026 installments are due April 15, June 15 and September 15, 2026, and January 15, 2027. The safe harbor is to pay in the lesser of 90% of your 2026 tax or 100% of your 2025 tax (110% if 2025 adjusted gross income was over $150,000), spread evenly across the four dates. Our estimated tax guide goes deeper; the short version is that a first-year LLC has no prior-year safe harbor and should set aside 25% to 30% of every net dollar from day one.

The QBI deduction takes some of the sting out

Schedule C profit is qualified business income, and the Section 199A deduction lets you deduct 20% of it, subject to limits. OBBBA made the deduction permanent. For 2026 the full deduction is available to any business type as long as taxable income before the deduction is under $201,750 for single filers or $403,500 for joint filers, with phase-in ranges of $75,000 and $150,000 above those figures. The deduction cannot exceed 20% of taxable income minus net capital gains, and it is computed on business income after the deductible half of SE tax and any self-employed health insurance or retirement deduction. See our QBI guide for the specified-service rules.

Worked example: $95,000 of net profit, as an LLC and as an S corporation

Take a Tampa marketing consultant, single, no other income, whose LLC nets $95,000 on Schedule C. Here is the 2026 federal computation using the $16,100 standard deduction and the 2026 Form 1040-ES rates.

Notice where the money goes. Self-employment tax is $13,423, nearly double the income tax, and it ignores both the standard deduction and the QBI deduction. That is the number the S corporation election is designed to reduce. Florida adds nothing to this bill; the state's only charge on this LLC is the $138.75 annual report.

When to elect S corporation (or C corporation) status

An LLC can keep its legal form and change its tax treatment. Filing Form 2553 makes it an S corporation: the owner becomes a W-2 employee paid a reasonable salary, payroll taxes apply to the salary, and the remaining profit passes through as a distribution free of self-employment tax. The election is due within two months and 15 days of the start of the year it takes effect, so March 15, 2027 for calendar year 2027, and late-election relief is available for up to three years and 75 days. Form 8832 instead makes the LLC a C corporation, taxed at the entity level and, in Florida, subject to the 5.5% corporate income tax after a $50,000 exemption; for an owner-operated service business that is rarely the right answer.

Run the consultant above as an S corporation with a $55,000 salary. Payroll taxes on the salary total $8,415, versus $13,423 of self-employment tax, but the QBI deduction shrinks with profit, and the net federal saving works out to about $2,850 before the cost of running payroll and filing a separate Form 1120-S. In our practice, that is why we rarely recommend the election below $60,000 of consistent net profit and usually start the conversation somewhere between $80,000 and $100,000. LLC vs. S corp walks through the full comparison, including the reasonable-salary rules that make or break the savings.

What Florida wants from a single-member LLC

Florida has no personal income tax, so a disregarded LLC files nothing with the Department of Revenue on its profit. The obligations that do exist are administrative, and the penalties for missing them are out of proportion to the effort.

The annual report is the one that bites. The Division of Corporations sends reminders to the email on file, and an LLC that ignores them is dissolved in September; reinstatement means paying every missed fee and penalty. Put May 1 on the calendar the day you form the company. Not formed yet? How to form an LLC in Florida covers the sequence.

Keeping the liability shield you formed the LLC for

The IRS may disregard your LLC, but a court will only respect it if you do. That means a separate business bank account and card, with no personal spending run through them and no business bills paid from your personal account. It means signing contracts as "Jane Doe, Manager, Doe Consulting LLC," not as Jane Doe, a written operating agreement even for one member, and a current annual report. Owner draws are fine; they are transfers from the business account to your personal account, recorded as distributions, and they are neither deductible nor wages.

One paperwork detail trips up disregarded LLCs constantly. On a Form W-9, the IRS wants the owner's name on line 1, the LLC's name on line 2, and the owner's taxpayer number in Part I, not an EIN issued to the LLC. Fill it out the other way and every 1099 you receive will be matched to the wrong number, which is how CP2000 notices are born.

When a spouse joins the business

Adding your spouse as a second member sounds harmless and is a real change: a two-member LLC is a partnership by default, which means a Form 1065 due March 15, two Schedule K-1s, and a more expensive return. The "qualified joint venture" election that lets married couples avoid a partnership return is not available to state-law entities; the IRS carves out an exception only for spouses in community property states, and Florida is not one. If your spouse simply works in the business, keep them an employee and keep the LLC single-member.

Common mistakes

The most common is treating the LLC as an S corporation without filing Form 2553: paying yourself "salary" through payroll, or worse, calling draws salary and skipping self-employment tax. The second is skipping estimated payments in year one because "the business has not made money yet," then meeting the underpayment penalty in April. Third is the Florida annual report, dissolved for want of $138.75. And fourth, more expensive than any of them, is mixing personal and business money so thoroughly that the LLC no longer protects anything.

When to get help

A single-member LLC with modest profit and clean books is a return you can reasonably prepare yourself. A professional starts paying for herself when profit passes roughly $80,000, when you are deciding on the S corporation election, when you hire your first employee and the payroll and reemployment tax rules arrive at once, or when a spouse or partner is about to join. Those are planning decisions, not filing decisions, and they belong in a tax planning engagement that looks at the whole year rather than the return after the fact.

If you already have the LLC and are not sure the estimated payments, annual report and bank account are set up the way they should be, request a 20-minute fit call. Bring last year's Schedule C and this year's profit so far; that is enough to tell whether you are on the right track.

Jenny Gao, CPA, EA

Founder of Balance Partners. Florida-licensed CPA and IRS Enrolled Agent with more than a decade of accounting and tax experience. Jenny writes and reviews every guide on this site. About Jenny

This article is general educational information for U.S. business owners and is not accounting, tax, legal, payroll or financial advice for your situation. Rules change and vary by entity, state and facts. Balance Partners, LLC does not provide audit, review or other attest services. Last reviewed September 14, 2026.