In this episode of the Tax and Accounting Ride Along Podcast, we’re breaking down one of the most common—and most misunderstood—topics in small business taxation: how LLCs are taxed. If you own an LLC (or are thinking about forming one), this episode is a must-listen. 🚗🎧

LLCs are incredibly popular because of their flexibility, but that flexibility also creates confusion—especially when it comes to taxes. By default, most LLCs are flow-through entities, meaning the business itself doesn’t pay income tax. Instead, profits and losses flow directly onto the owners’ personal tax returns. This structure helps avoid double taxation, but it also comes with important responsibilities that many business owners overlook.

We’ll walk through how single-member LLCs are treated as disregarded entities, while multi-member LLCs are taxed like partnerships by default. We’ll also explain why the number of members matters and how ownership percentages impact who reports what on their tax return.

A major focus of this episode is self-employment tax—what it is, why LLC members are subject to it, and how it can significantly impact your overall tax bill. Many LLC owners are surprised to learn that even though their business is “pass-through,” they’re still responsible for Social Security and Medicare taxes on their share of the profits. 💸

From there, we dive into LLC tax elections. Did you know an LLC can elect to be taxed as an S corporation or even a C corporation in certain situations? We’ll discuss:

When an S corporation election might help reduce self-employment taxes

Why a C corporation election is rarely used—but sometimes strategic

What business owners should understand before making any election with the IRS

We’ll also touch on the importance of proper recordkeeping, staying compliant as tax laws change, and why trying to “DIY” LLC tax planning can lead to costly mistakes.

Most importantly, this episode reinforces a key truth: LLC taxation is not one-size-fits-all. The right tax structure depends on your income, growth plans, and personal financial situation—which is why professional guidance is so critical.

Whether you’re a new LLC owner, a seasoned entrepreneur, or just trying to better understand how your business is taxed, this episode will give you clarity, context, and practical insight you can actually use.

So buckle up and ride along as we demystify LLC taxation and help you make smarter, more informed decisions for your business. 🚦