Is single member LLC a corporation, A single member LLC is not a corporation but it can become a corporation, do you understand?
Hey! Are you searching to know if a single member LLC (SMLLC) member is a corporation, do you want to get the correct answer? Read on we have explained and compiled together every information you needed.
one certain thing is a single member LLC will always be single and be treated as one unless a corporation form 8832 is filed which will then make it a corporation.
Corporation definition and characteristics
What is a corporation: a corporation may be defined as a group of business owners or people that comes together to achieve good results or a common goal.
According to Chief Justice John Marshall in the year 1819, he quoted corporation as “a corporation is an artificial being, invisible, intangible, and existing only in a contemplation of law”.
In explaining this in a simple language Justice John Marshall meant that a Corporation is a man-made existence that can not be seen with physical eyes and it’s been guided by a law.
A corporation may also be referred to as a group of professionals, individuals, or companies coming together to become one organization that is recognized by the law. Their aim of coming together is to achieve a goal beneficial to each member.
In a corporation, there are rules, and standards set that each member of the corporation must follow, these rules and standard is what will be guiding the corporation.
Is single member LLC a corporation, read on for we will explain everything.
Characteristics of a corporation
Corporation characteristics are those features possessed by a corporation.
· tax payment
· Limited Liability
· Easy Fundraising
· Government regulation
Tax payment: a corporation is subjected to paying taxes, they pay tax as a corporation and they also pay tax at individual levels.
A corporation pays tax at both the federal and state level.
Also, for every income earned at the corporation its tax must be paid, after the tax has been paid the remaining income will be distributed to its members or shareholders, and they will also pay their tax from the income they received.
Tax payment is one of the features of corporations.
· Limited liability: a corporation protects its members from being attacked personally or being sued personally.
Once you are a member of a legal corporation your creditors will no longer touch your assets in exchange for the debt you owe them, Instead, they will hold your business responsible.
This is why many people or business owners join a corporate group to protect their personal properties.
· Easy fundraising: fundraising is among the characteristics of a corporation.
Because it involves many types of companies, stock traders, business men and women raising funds will be very easy.
No need to seek for loan outside, also the loan will be raised within a short period.
· Government regulation: since the corporation is legal government will usually regulate its activities to see if it’s complying with the law.
This regulation by the government will help to prevent any member of the corporation from being treated unfairly in terms of revenue shares.
Limited liability company (LLC)
There are 2 known types of LLC
· Single member LLC
· Corporate member LLC
Single member LLC have only one member while corporate member LLC are made up of many members.
Is single member LLC a corporation
No, Single member LLC is never a corporation it is only controlled by one member.
A corporation is what involves more than one person but since it involves only one person, it is no longer a corporation.
You can either form a single LLC or a corporate LLC
The rules and laws guiding a single member LLC in the United States allow only one member to own it, since it’s only one member that operates it, it is not a corporation.
For a single member LLC to become a corporation it must undergo certain changes which are
Filing a corporation form C 8832 after going through this process it will no longer become a single member LLC but a corporate member LLC.
Everyone will be able to join, there is no maximum number of members to join.
Is single member LLC a corporation, Hope you understand this very well, a single member LLC is not corporate and can never be unless file some 8832 form to change the status from single to corporate.
Differences between single member LLC and corporate
Here are the main differences between this 2
· Single member LLC shares profits gotten from the business by himself only.
While corporate LLC share profits with their members according to how they invested.
· Every member of corporate LLC brings ideas or suggestions on the best way to improve their business and take it to higher levels.
While single member LLC is the only one to plan everything by himself on how to enhance his business service.
· Single member LLC is the only one to bring money to support his business
While corporate LLC members will contribute money together to support their business.
Is single member LLC a corporation, there is difference between them.
What type of small business should I have to become Single-member LLC
Many are not yet sure of the type of small business they can have before they can be able to form a single-member LLC.
Don’t worry I’m here to clarify you and explain things for you in a way you can easily understand.
A single LLC is for small business owners so that it can protect their business from future circumstances.
Now what type of small business can one have before forming this single-member LLC?
Regarding this, you can form a single-member LLC with any type of business you are into be it an online business or offline business.
As long as the business is legal and legit you can use it for an LLC single member.
Example of the business
- Graphic design
- Shop owner
- Relationship expert
- Blog owner
- Medical practitioner
- Engineering. Etc
These are a few examples you can use to form a single-member LLC.
Choosing the right business for single member LLC
How to choose the right business to form a single-member LLC is not too hard.
- You have to choose the business you are into and know about it very well.
- Choose the business that interests you
- Choose the type of business you can perfectly render
Corporations and single are not the same
Single involves only one person while corporate involves more than one person.
Is single member LLC a corporation
No, it is not but it can be changed to a corporate LLC.
The process of changing the status is not that hard to do.