LLC guide · Start here
Types of LLCs, and which one fits.
LLCs come in a few shapes. Some differences are about ownership, some about who runs the business, and some only exist in certain states. Here is how they line up.
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The short version
- Ownership: single-member or multi-member.
- Management: member-managed or manager-managed.
- Special forms like professional and series LLCs depend on your state.
- Tax classification is a separate choice from the type of LLC.
Single-member and multi-member
A single-member LLC has one owner. By default the IRS disregards it for income tax, so the profit and loss go on the owner's personal return. It is the most common choice for solo founders and freelancers.
A multi-member LLC has two or more owners. By default it is taxed as a partnership, files its own information return, and gives each member a Schedule K-1 showing their share. With more than one owner, a clear operating agreement matters even more.
Member-managed and manager-managed
In a member-managed LLC, the owners run the business day to day and can generally sign on its behalf. This is the default in most states and the usual choice for small businesses.
In a manager-managed LLC, the members appoint one or more managers, who may or may not be members, to run things. It suits businesses with passive investors or owners who do not want to be involved in daily decisions. You state the structure in your articles and spell out the details in the operating agreement.
Professional LLCs (PLLC)
Licensed professionals such as doctors, lawyers, accountants, and architects are often required to use a professional LLC. Members usually must hold the relevant license, and the licensing board may need to approve the filing. A PLLC does not shield a professional from their own malpractice.
Rules vary widely. A few states, like California, do not let certain licensed professions use an LLC at all and require a professional corporation instead.
Series LLCs
A series LLC is one parent LLC with separate cells, or series, underneath it. Each series can hold its own assets and, where the law allows, keep its liabilities apart from the others. Real estate investors use them to hold properties separately.
Only some states allow series LLCs, including Delaware, Texas, and Illinois, and how other states, courts, and banks treat them is still developing. They add complexity, so they are worth a conversation with an attorney first.
Other forms you may hear about
- Domestic and foreign LLCs: about where the LLC was formed and where else it is registered. See the foreign vs. domestic guide.
- Anonymous LLCs: some states, such as Wyoming and New Mexico, do not list members or managers in public filings. Your information is still required by the IRS, banks, and other agencies.
- Low-profit LLCs (L3C): a mission-driven form available in a small number of states.
Tax classification is a separate choice
Whatever type you form, the IRS treats it as a disregarded entity (one member) or a partnership (two or more) unless you elect otherwise. An LLC can elect to be taxed as an S corporation with Form 2553 or as a C corporation with Form 8832. The business stays an LLC under state law either way. See LLC taxes and LLC vs. S corp.
This guide is general information, not legal or tax advice. Rules differ by state and change over time, so check your state's official website or a licensed professional before you act. YaH Brands is not a law firm or an accounting firm.
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Operating agreement
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Common questions
Yes. You add the member under your operating agreement and update any state records that list members. The tax treatment changes to a partnership by default, and the IRS generally requires a new EIN in that case.
Most small businesses where the owners run things choose member-managed. Manager-managed fits when some owners are investors only.
No. S corporation status is a tax election. An LLC can make it and still be an LLC under state law.