How are LLCs taxed?

LLCs have a flexible taxation structure in that they can be taxed as a sole proprietorship, a partnership, or a corporation. The Internal Revenue Services, or “IRS,” automatically classifies LLCs as either partnerships or sole proprietorships, depending on whether they have one owner or more than one owner, which means that LLCs do not pay any corporate taxes. Instead, income and expenses pass through to the owners’ personal tax returns, and the owners pay personal income tax on any profits.