Single-Member LLC (SMLLC) - ENGAGE CPAs

A single-member LLC is an entity structure that is created at the state level. If you register with your state to create an LLC, you're basically creating a legal barrier between your personal assets and finances, and that of your business. Contrary to popular belief, an LLC provides legal protection to the owner in the event they are sued but does not directly create any sort of tax advantage. Once you register with your state, you can then obtain an EIN from the IRS. This will allow you to use the EIN on all paperwork, bank accounts and payroll records, instead of your social security number.
Even though you have an EIN and an LLC setup, a single-member LLC is still considered a disregarded entity in the eyes of the IRS, which means that the IRS sees no difference between John Smith earning $50,000 of self-employment income from cutting lawns and John Total Landscaping LLC earning $50,000. A Single-Member LLCs income (not owner draws) will be taxed at ordinary income tax rates plus self-employed tax rates, on the owner's personal tax return (Form 1040).
It is very important to set up brand new bank accounts, credit card accounts, loan accounts, payroll accounts, etc. when creating a new LLC with a new EIN. All accounts that you're using to run the business must be using that LLC name and EIN. Without those clearly defined lanes for personal and business money, the LLC provides you no protection because one can argue that you're commingling funds. This is VERY important in maintaining the separation of business and personal assets.
Remember these four things:
*DO NOT pay for personal expenses directly from the business.
*DO NOT pay yourself via W2 payroll.
*DO NOT use your business bank account as if it was a personal bank account.
PROTECT YOUR LLC