--- title: "Limited liability company (LLC): Definition and Sources | Tax Glossary" description: "A limited liability company is a state-created business entity whose owners are called members; the IRS taxes it by default as a sole proprietorship or a..." url: https://wallacecpa.multisites.ai/glossary/limited-liability-company-llc publisher: Wallace CPA phone: +1-877-682-1171 quote: https://wallacecpa.multisites.ai/contact --- Business entities # Limited liability company (LLC) A limited liability company is a state-created business entity whose owners are called members; the IRS taxes it by default as a sole proprietorship or a partnership. An LLC is formed under state law. The IRS does not tax it as an LLC. Instead, the IRS sorts each LLC into a federal tax class. A one-member LLC is usually ignored for income tax and reported on the owner's return. An LLC with two or more members is taxed as a partnership. An LLC can file Form 8832 to be taxed as a corporation. It can also choose [S corporation](https://wallacecpa.multisites.ai/glossary/s-corporation) status. Texas LLCs also report to the Comptroller each year under the [Texas franchise tax](https://wallacecpa.multisites.ai/glossary/texas-franchise-tax). See the [guide to S corporations, LLCs and sole proprietors in Texas](https://wallacecpa.multisites.ai/guides/s-corp-llc-sole-proprietor-texas) for a side by side view. [Wallace CPA can helpNew business formation](https://wallacecpa.multisites.ai/services/business-formation) ## Related terms - [S corporation](https://wallacecpa.multisites.ai/glossary/s-corporation) - [Texas franchise tax](https://wallacecpa.multisites.ai/glossary/texas-franchise-tax) - [Employer identification number (EIN)](https://wallacecpa.multisites.ai/glossary/employer-identification-number-ein) - [Self-employment tax](https://wallacecpa.multisites.ai/glossary/self-employment-tax) ## Sources 1. [IRS: Limited liability company (LLC)](https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc) ## Talk to Wallace CPA Call the Southlake office and say what you need: a return, an IRS letter, your books or a new business. Have the notice or last year's return nearby if you have one. [Call (877) 682-1171](tel:+1-877-682-1171)[Send a message](https://wallacecpa.multisites.ai/contact) 180 State Street, Suite 225, Southlake, TX 76092