Llc or sole proprietor

Forum|Forum|1 year ago
November 13, 2024
2 replies
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I am a hairstylist, and I am wondering if there is any benefit of becoming a single member LLC, over a sole proprietorship in terms of paying less taxes?

im currently a salon owner as a member of a 3 person LLC, and we get some QBI deductions . I am dissolving this business and going solo next year, and wondering if and how I can get QBI deductions.

and lastly, does a single member llc or a sole proprietorship have to file business returns?

Ask the Experts - Biz Tax Moves - Nov 2024

marctu

A single member LLC is able to file using a Schedule C, which is part of the larger personal 1040 tax filing, so you will not need to file a separate business return like you did with the multi-member LLC (Form 1065 or Form 1120-S).

To the extent you have net business income you will still be able to claim the QBI deduction, which you were able to do as a multi-member LLC.

Best of luck in the new incarnation of your business @Heleniporter and thank you for the question.

All the best,

Marc T.

Turbo Tax Expert

27 Years of Helping Clients

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rjs

Employee

As far as income tax is concerned a single-member LLC is exactly the same as a sole proprietor. The single-member LLC is "disregarded" for income tax purposes.