How is a single-member LLC taxed by default and can I change it?

By default the IRS treats a single-member LLC as a 'disregarded entity,' meaning it is invisible for federal income tax and you report business income on Schedule C of your personal return, just like a sole proprietor. You still get the legal liability separation of an LLC, but you owe self-employment tax on the net profit. You can change the tax treatment by filing an election: Form 8832 to be taxed as a C-corp, or Form 2553 to be taxed as an S-corp. The legal structure stays an LLC either way; only the tax classification changes. Most solos leave it as a disregarded entity until profits are high enough to justify an S-corp election.