The Single-Member Limited Liability Company
A single-member LLC isn’t actually a different type of LLC. It’s just a normal, regular LLC with one exception: there is only one member. Because LLCs were originally intended to be partnerships, a single-member LLC is still subject to some slightly different rules. Unlike an LLC with multiple members, a single member LLC is not allowed to elect the partnership form of taxation with the IRS.
Additionally, in some states, a single-member LLC doesn’t have the same level of charging order protection as a multiple-member LLC. This is because charging order protection was meant to protect the innocent partners from a member who has been subject to a judgment.
Aside from these few limitations, a single-member LLC is not much different than a multi-member one. Even though there is only one member, it’s still required to have a detailed operating agreement in place. It’s also still a good idea to document all company decisions in writing and retain them in the company kit, even though there is only one person deciding.
Single-member LLCs are generally easy to run; however, don’t get fooled into thinking that you’re exempt from all of the documentation required of other, multi-member LLCs.