If you’re considering starting your own business in the United States, you’ve probably come across the term LLC, or Limited Liability Company. It’s one of the most popular legal business structures for entrepreneurs, freelancers, and startups. But what type of LLC is the most common, and why?
In this article, we’ll break down the most commonly used LLC structure, why it’s so popular, and how it could be the right choice for your business.
What Is an LLC?
An LLC (Limited Liability Company) is a business structure that offers its owners (called “members”) protection from personal liability, while allowing flexibility in how the business is taxed and managed. Unlike a corporation, an LLC is simpler to form and operate, with fewer reporting requirements and greater operational freedom.
The Most Common LLC: Single-Member LLC
The most common type of LLC in the United States is the Single-Member LLC.
This structure is used by solo entrepreneurs who want to enjoy the benefits of a legal business entity without the complexity of running a corporation or partnership.
Key Features:
- Owned and operated by one person
- Offers limited liability protection to the owner
- Income and expenses are reported on the owner’s personal tax return
- Flexible management with no board of directors or formal meetings required
Why Is the Single-Member LLC So Popular?
There are several reasons why most new business owners choose a single-member LLC:
1. Simplicity
Forming and maintaining a single-member LLC is easy and cost-effective. There are fewer compliance rules compared to corporations, and annual filings are minimal in many states.
2. Legal Protection
Like other LLCs, single-member LLCs provide limited liability, which means your personal assets are protected if your business is sued or incurs debt.
3. Tax Benefits
Single-member LLCs are pass-through entities by default, which means profits and losses pass directly to the owner’s personal tax return. There’s no need to file a separate corporate tax return unless the owner elects corporate taxation.
4. Professional Credibility
Having “LLC” in your business name adds a level of legitimacy and professionalism that sole proprietorships often lack.
Other Common Types of LLCs
While single-member LLCs are the most popular, other types of LLCs are also common depending on the business size and structure:
1. Multi-Member LLC
- Owned by two or more people
- Profits and responsibilities are typically divided according to an operating agreement
- Also treated as a pass-through entity unless otherwise elected
2. Manager-Managed LLC
- Owners choose to appoint a manager to run the day-to-day operations
- Useful for passive investors or when owners don’t want to manage the business themselves
3. Member-Managed LLC
- All members are actively involved in running the business
- Best for small teams who want shared control
When Should You Choose a Single-Member LLC?
A Single-Member LLC is ideal for you if:
- You’re starting a business alone
- You want legal protection but don’t need partners
- You prefer simplified tax reporting
- You want to keep paperwork and costs low
Many freelancers, consultants, e-commerce sellers, and small service providers opt for this structure to stay compliant without dealing with corporate formalities.
Real-World Example
Imagine Sarah, a graphic designer, decides to launch her own design studio. She doesn’t have a partner, employees, or outside investors. She chooses a Single-Member LLC because:
- It protects her personal assets if something goes wrong
- She can still report all income on her personal tax return
- It makes her business look more professional to clients and vendors
How to Form a Single-Member LLC
- Choose a Business Name
Ensure it’s available in your state and complies with local naming rules. - File Articles of Organization
Submit the formation documents to your state’s Secretary of State office. - Get an EIN from the IRS
Even single-member LLCs need an Employer Identification Number (EIN) for taxes and banking. - Create an Operating Agreement (Recommended)
Although not required in every state, having one is good practice. - Open a Business Bank Account
Keep your personal and business finances separate to maintain liability protection.
For more details, visit the official IRS guide to LLCs or check your state’s business registration page on usa.gov.
Final Thoughts
The Single-Member LLC is the most common type of LLC for good reason—it’s simple, flexible, and offers strong protection for solo entrepreneurs. Whether you’re a freelancer or launching your first product-based business, starting with a single-member LLC can help you build a solid, professional foundation.
Before you begin, make sure to research your state’s specific laws and consider speaking with a business attorney or tax advisor to ensure this structure fits your goals.