I Started a Single-Member LLC: How Is It Taxed on My Personal Return?
Published October 29, 2026
A single-member LLC is usually invisible to the IRS for income tax purposes. By default, the IRS treats it as a disregarded entity, so its profit and losses go on your personal Form 1040, usually through Schedule C (Form 1040), Profit or Loss From Business. You also owe self-employment tax on the profit, figured on Schedule SE (Form 1040). Forming the LLC with your state does not change that by itself.
Does my LLC file its own federal income tax return?
Generally, no. Publication 334, Tax Guide for Small Business, says that for income tax purposes a single-member LLC is disregarded as an entity separate from its owner. It reports its income and deductions on the owner’s federal return. If the LLC is not farming and the owner is an individual, the owner may use Schedule C. The LLC can still have its own state filings and fees, but those are separate from your federal return.
Where does the profit go on my return?
Your business income and deductible expenses go on Schedule C. Its net profit, which Publication 334 points to on line 31 of Schedule C, carries to your Form 1040 and into Schedule SE. Net profit is your business income minus ordinary and necessary business expenses. Keeping the LLC’s money in its own bank account is a recordkeeping habit that makes the numbers easier to prove. It is not a separate tax election.
What is self-employment tax, and how much is it?
Self-employment tax pays your share of Social Security and Medicare. Publication 334 gives the rate as 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare, once your net earnings from self-employment are $400 or more. Social Security tax stops at a wage base. For 2026, that base is $184,500, according to the “What’s New for 2026” section of Publication 334. Schedule SE does the math. You then deduct one-half of the SE tax on line 15 of Schedule 1 (Form 1040). That lowers your income tax, but it does not reduce the SE tax itself.
What is a worked example?
Illustration only, with made-up round numbers: Jordan forms a single-member LLC for a freelance design business. In 2026 the business brings in $60,000 and has $20,000 of ordinary expenses for software, a laptop, and a website domain. The Schedule C net profit is $40,000.
Step 1: Schedule SE counts 92.35 percent of net profit: $40,000 × 0.9235 = $36,940.
Step 2: Multiply by 15.3 percent: $36,940 × 0.153 = about $5,652.
Step 3: Deduct one-half of that SE tax, about $2,826, on Schedule 1. Jordan still owes income tax on the rest. The 20 percent qualified business income deduction, which Publication 334 says is now permanent, may also apply, figured on Form 8995 or Form 8995-A. Those forms are outside this example.
What is the most common mistake?
Assuming the LLC pays the tax, so nothing is due until the next April. Income tax is not withheld from business profit, so the IRS expects you to pay as you go. Publication 334 says you generally must make estimated tax payments if you expect to owe $1,000 or more, including self-employment tax, when you file. Publication 505, Tax Withholding and Estimated Tax (2026 edition), explains the safe harbor. You are protected from an underpayment penalty if your withholding and estimated payments cover at least the smaller of 90 percent of your 2026 tax or 100 percent of your 2025 tax. The 2025 figure becomes 110 percent if your 2025 adjusted gross income was more than $150,000 ($75,000 if married filing separately).
If you ever elect to have the LLC taxed as a corporation, different forms and rules apply. Talk with a credentialed tax preparer before you make that choice.
What should I do next?
A simple starting checklist:
- Open a separate bank account and card for the business, and keep personal spending out of it.
- Record every sale and expense with the date, amount, and business purpose. Publication 583, Starting a Business and Keeping Records, is the IRS guide to setting this up.
- Each quarter, estimate the year’s profit and self-employment tax, and move money aside for both income tax and SE tax.
- Check whether an estimated payment is due, using Form 1040-ES, Estimated Tax for Individuals.
When you are ready to see how your numbers fit into a full return, see how it works. This article is general information, not advice about your return.
Sources: IRS Publication 334, Tax Guide for Small Business (2025 returns edition), single-member LLC section, Schedule C line 31, self-employment tax, estimated tax, and What’s New for 2026; IRS Publication 505, Tax Withholding and Estimated Tax (2026 edition), estimated tax safe harbor and 110 percent footnote; IRS Publication 583, Starting a Business and Keeping Records; Schedule SE (Form 1040) instructions; Form 1040-ES; Form 8995 and Form 8995-A. This is general information, not advice about your specific return.
