Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Classification of LLCs
Single-Member LLC (smllc)
Disregarded Entity
The IRS describes a disregarded entity as follows:
"For income tax purposes, an LLC with only one member is treated as an entity disregarded as separate from its owner, unless it files Form 8832 and affirmatively elects to be treated as a corporation. However, for purposes of employment tax and certain excise taxes, an LLC with only one member is still considered a separate entity. If a single-member LLC does not elect to be treated as a corporation, the LLC is a "disregarded entity," and the LLC's activities should be reflected on its owner's federal tax return."
Note: If an LLC is owned by husband and wife in a non-community property state, the LLC should file as a partnership. LLCs owned by a husband and wife are not eligible to be "qualified joint ventures" (which can elect not be treated as partnerships) because they are state law entities.
A single-member LLC will automatically be taxed as a sole proprietorship under the default rule unless an election is made to treat the LLC as either a C corporation or on S corporation. The default rule, as it applies to a single-member LLC, simply means if you do not make an entity classification election for your LLC to be treated as a C or S corporation for tax purposes, then your LLC will automatically be treated as a sole proprietorship.
If an election is made to treat the LLC as either a C or S Corporation, then any LLC member who works for the business is treated as an employee. This means the same employment tax rules that apply to non-owner employees apply to LLC owners (members) who work for the business.
Multiple-Member LLC
A multiple-member LLC includes two or more members and is automatically treated as a partnership for tax purposes, unless an entity classification election is made to treat the LLC as a C or S corporation for tax purposes. To make an entity classification election, Form 8832 must be filed to elect C corporation tax treatment or Form 2553 to elect S corporation tax treatment.
Tax Filing Rules
Assuming no entity election has been made, a single-member LLC files Schedule C (or Schedule F for a farming) annually and a multiple-member LLC files Form 1065 annually. If an entity election is made by either a single-member LLC or multiple-member LLC to treat the LLC as a C corporation, Form 1120 is filed annually. If an election is made by a single-member or multiple-member LLC to treat the LLC as an S corporation, Form 1120S is filed annually.
Legal vs Tax Treatment
Electing C or S corporation tax treatment is simply a tax election and does not change the legal status of the business. An LLC remains subject to the laws of the state of formation.