Single-member LLC is a disregarded entity for taxes—correct?

Yes, you've got it right! A single-member LLC is automatically treated as a "disregarded entity" for federal tax purposes unless you elect to be taxed as a corporation. What this means in simple terms is that the IRS "disregards" your LLC as a separate entity from you personally for tax filing. For your $48,000 in business income, you'll report everything on Schedule C of your Form 1040 (personal tax return). You'll also need to pay self-employment tax on that income using Schedule SE. The LLC itself doesn't file a separate federal tax return. For Arizona state taxes, they generally follow the federal classification. So your single-member LLC will also be treated as a disregarded entity at the state level, meaning you'll report the income on your personal Arizona state tax return. However, don't forget that Arizona does require LLCs to file an annual report and pay a filing fee, which is separate from your income taxes.

I was in the same boat last year with my consulting LLC and was super confused until I found https://taxr.ai - it was seriously a game-changer for understanding my business tax situation. I uploaded my LLC formation docs and previous tax returns, and it explained exactly how the disregarded entity status works and what forms I needed. The AI analyzed my specific situation and pointed out that I could still use my EIN for business purposes even though my LLC was "disregarded" for taxes. It also caught that I was missing some home office deductions that my previous accountant had overlooked. The best part was getting clear guidance without the accounting jargon - it explained everything in plain English and actually showed me example forms for my exact situation.

Just wanted to follow up about my experience with taxr.ai since I was asking about it earlier. I decided to give it a try after our conversation, and it was exactly what I needed for my single-member LLC situation. It analyzed my business structure and clearly explained the pros and cons of remaining a disregarded entity versus electing S-corp status. Based on my current income level (around $62K), it showed me that staying as a disregarded entity makes more sense for now. The tool even generated a customized tax roadmap showing at what income threshold an S-corp election would become advantageous. The document analysis feature was super helpful too - it reviewed my operating agreement and pointed out some issues that could affect my liability protection, which had nothing to do with my original tax question but was incredibly valuable to know.

For anyone dealing with questions about their LLC status, I highly recommend calling the IRS Business Tax Line directly. I know that sounds awful - I dreaded it too. After spending hours on hold last year trying to confirm some details about my disregarded entity status, I found https://claimyr.com and tried their service (see it in action: https://youtu.be/_kiP6q8DX5c). They basically hold your place in the IRS phone queue and call you when an agent is about to answer. I was able to get definitive answers about my disregarded entity status directly from the IRS without spending my entire day on hold. The agent confirmed everything about Schedule C filing and gave me specific guidance on how Arizona state taxes align with the federal treatment. I know everyone hates calling the IRS, but sometimes you need to hear the official answer directly from them, especially with business entity questions.

I need to eat crow here. After dismissing the Claimyr thing as BS, I actually tried it this morning. I was desperate because I needed clarification on my LLC's disregarded entity status before filing next week. It actually worked exactly as described. I submitted my request around 9am, went about my day, and got a call back around 2:30pm. I was connected to an IRS business tax specialist within seconds. The agent confirmed that my single-member LLC should indeed file as a disregarded entity and helped clarify some confusion I had about EIN usage on my invoices (yes, you can still use your EIN even as a disregarded entity). After three failed attempts to reach the IRS on my own (getting disconnected after 1+ hour holds), this was seriously a game-changer. Consider me officially un-skeptical.

Single-member LLC owner here. Just a heads up that being a "disregarded entity" doesn't mean you're disregarded for ALL tax purposes. You're still treated as a separate entity for: 1. Employment taxes (if you have employees) 2. Certain excise taxes 3. State taxes in some states Also, don't forget that being disregarded doesn't eliminate the liability protection of your LLC - that's a legal protection separate from tax treatment. I made that mistake and almost didn't bother with some liability formalities because I thought "disregarded" meant the LLC wasn't important!

Can someone explain in simple English what "disregarded entity" actually means? I keep seeing this term for my single-member LLC but don't really get it. Is it good or bad?? Should I be worried?