Different types of LLC: what you need to know
Wyoming created the first U.S. LLC to address the needs of local entrepreneurs who weren’t in a position to start a corporation but wanted limited liability protection while maintaining the simplified tax structure of a sole proprietorship and partnership.
As the popularity of LLCs grew, individual states came to realize the need for different types of LLC structures. Today, each state governs LLCs in its own way. Every state allows single-member, multi-member, domestic and foreign LLCs, but series, professional, low-profit and anonymous LLCs depend on the state you choose for starting an LLC.
There are 8 common types of LLC, and they fall into three groups. Ownership decides whether you have a single-member or multi-member LLC, location decides whether it’s domestic or foreign, and special-purpose LLCs (series, professional, low-profit and anonymous) cover specific needs. Every type gives owners the same basic limited liability protection.
The table below compares all 8 types.
| Type | What it is | Best for | Where available |
|---|---|---|---|
| Single-member LLC | An LLC with one owner | Solo entrepreneurs and freelancers | All states |
| Multi-member LLC | An LLC with two or more owners | Partners, co-founders and family businesses | All states |
| Domestic LLC | An LLC formed in the state where it does business | Businesses that operate in one state | All states |
| Foreign LLC | An LLC registered to do business outside its formation state | Businesses expanding into other states | All states |
| Series LLC | A parent LLC with separate series under it | Real estate investors and owners of several ventures | About two dozen jurisdictions |
| Professional LLC (PLLC) | An LLC for licensed professionals | Doctors, lawyers, accountants and other licensed professions | Most states, not California |
| Low-profit LLC (L3C) | A for-profit LLC with a charitable purpose | Social enterprises seeking foundation investment | A handful of states |
| Anonymous LLC | An LLC that keeps owner names off public filings | Owners who want privacy | Delaware, New Mexico, Wyoming and a few others |
A quick LLC recap
The first recording of an LLC legal structure originated in Germany around 1892. Wyoming was the first state to recognize it in America, passing the first U.S. LLC law in 1977.
The idea of the LLC business structure was to go beyond “sole-proprietorship and partnership associations,” enabling owners to create a tax-friendly company while maintaining a level of protection for their personal assets.
The LLC business structure achieves this by using pass-through taxation, equal to a sole proprietorship or a partnership, combined with the limited liability of a corporation. It may help protect your assets and reduce your paperwork, and you can tailor an LLC to suit your company’s situation.
While each state has its own rules for forming an LLC, the legal structure is similar everywhere. All that remains is to choose the right type of LLC for your business.
LLC types by ownership
Every LLC is either single-member or multi-member. The number of owners also decides how the IRS taxes your LLC by default.
Single-member LLC
Solo entrepreneurs often choose the single-member LLC structure due to low setup costs and minimal paperwork compared to other LLC structures. As you’re going it alone, you’ll be solely responsible for compliance, taxes and keeping business and personal finances apart.
For tax, the IRS views a single-member LLC as a “disregarded entity.” This means you report your company’s profits and losses on your personal income tax return, similar to a sole proprietorship, unless you elect to be taxed as a corporation.
Courts are more likely to ignore the liability shield of a one-owner LLC that mixes personal and business money. You can reduce that risk by writing an operating agreement that shows you and your LLC are separate and by keeping a separate business bank account. Learn more about how an LLC protects your personal assets.
Advantages of a single-member LLC
- It’s a simple tax system
- You make every decision yourself
- You can add members later as the business grows
Disadvantages of a single-member LLC
- Increased paperwork compared to a sole proprietorship
- You’re required to file annual reports and other compliance forms with your state
- You can lose your liability protection if you mix personal and business finances
Multi-member LLC
A multi-member LLC has two or more members, but apart from that, the setup is similar to a single-member LLC. One key difference between single-member and multi-member LLCs is that members should agree on and sign an operating agreement that covers ownership shares, voting and what happens if someone leaves.
Multi-member LLC owners pay taxes like partnerships by default. The LLC files Form 1065 each year and gives every member a Schedule K-1, and members report their share of the profits and losses on their own tax returns.
Advantages of a multi-member LLC
- Unlimited members are allowed
- Members can include individuals, LLCs and corporations, as well as non-U.S. citizens
- It’s a pass-through entity by default, and you can choose to be taxed as an S corp or C corp
Disadvantages of a multi-member LLC
- More members mean more paperwork regarding formation and taxes
- Disagreements between members can stall decisions without a clear operating agreement
- Owners can only become employees of their LLC after they change their tax status
LLC types by location
Where you form your LLC and where you do business decide whether it’s domestic, foreign or both. The same LLC is domestic in its home state and foreign in every other state where it registers.
Domestic LLC
A domestic LLC is a limited liability company that is formed and officially registered in the same state where it primarily does business. It follows that state’s laws and regulations and does not need to register as a foreign entity there.
For example, if you start an LLC in Texas and operate your business only in Texas, your company is considered a domestic LLC in Texas. The vast majority of LLCs are domestic LLCs, and it’s the simplest and most straightforward option.
Foreign LLC
A foreign LLC is a limited liability company that was formed in one state but does business in another state, requiring it to register in that second state as a foreign entity. This allows the LLC to legally operate outside its home state.
For example, if you form an LLC in Delaware but open an office or hire employees in California, your Delaware LLC must register as a foreign LLC in California.
Each state decides what counts as “doing business” there. An office, employees or a store in the state usually counts, while selling to customers across state lines, holding meetings or keeping a bank account there usually doesn’t. To register, a foreign LLC files an application (often called a certificate of authority), pays the state’s fee and appoints a registered agent in that state. It then files that state’s annual reports and tax returns. Doing business without registering can lead to fines and back fees, and the LLC may not be able to bring a lawsuit in that state’s courts.
Some business owners choose to form their LLC in a different state because certain states are known for being more business-friendly or having lower fees. However, if you live in or run your business in another state, you’ll usually still need to register your LLC there as a foreign LLC, which means paying fees in both states.
Special-purpose LLC types
These LLCs are built for specific situations. Not every state allows them, so check your state’s rules before you file.
Series LLC
A series LLC is made up of an umbrella or parent LLC and smaller series under its control, sometimes called cells. Each series can have its own members, managers, assets and purpose. If one series goes into debt or is sued, the liabilities are usually only enforceable against that series.
For example, a real estate investor could hold each rental property in its own series, so a lawsuit over one property doesn’t put the others at risk. A restaurant owner opening a second location could do the same. If you’re comparing options, see how running multiple businesses under one LLC works.
About two dozen jurisdictions allow series LLC formation, including Delaware, Illinois, Nevada, Texas and Wyoming, and Florida joined them on July 1, 2026. Some states that don’t allow series LLCs may not respect the separation between series, and federal tax rules for series LLCs exist only as IRS proposed regulations from 2010.
Advantages of a series LLC
- One parent LLC can hold several businesses or properties
- Each series’ assets are protected from the debts of the others
- Adding a series is usually quicker and cheaper than forming a new LLC
Disadvantages of a series LLC
- Every series needs its own bank account and separate accounting, and administrative costs could be high
- Some states charge a fee or tax for each series
- Series LLCs are a relatively new business structure, and legal questions such as what happens in bankruptcy are yet to be answered
Professional LLC (PLLC)
Many states require licensed professionals, such as accountants, lawyers and medical providers, to form a PLLC instead of a regular LLC. A professional limited liability company works in much the same way as any other LLC entity, protecting owners from business debts and providing equal flexibility regarding management structure and pass-through tax.
A PLLC doesn’t protect professionals from their own malpractice, but it can protect members from the malpractice of another member. Most states allow PLLCs, though some limit them to certain professions. One exception is California, where licensed professionals can’t form an LLC and use a professional corporation or, for some professions, a limited liability partnership instead.
Advantages of a PLLC
- PLLC members may not be liable for the malpractice of another member
- A PLLC can choose to pay tax as a pass-through entity or as a corporation
- PLLCs are easy to form, inexpensive to run and have fewer compliance requirements than a corporation
Disadvantages of a PLLC
- You can only form a PLLC if the owners hold the required professional license
- In some states, every member must have a license in the same profession
- Some states require approval from a licensing board before you file
Low-profit LLC (L3C)
An L3C is a for-profit LLC formed mainly to serve a charitable or educational purpose, with making a profit as a secondary goal. It’s a hybrid created to attract both private investment and money from private foundations, which can invest through program-related investments.
An L3C pays taxes like any other LLC. It isn’t a nonprofit, donations to it aren’t tax-deductible, and the IRS hasn’t ruled that an investment in an L3C automatically qualifies as a program-related investment. Only a handful of states allow L3C formation, including Vermont (the first, in 2008), Illinois, Michigan, Utah and Wyoming, but an L3C can register to do business in other states as a foreign LLC.
Advantages of an L3C
- It can attract both mission-driven and profit-seeking investors
- It enables charities to create subsidiary L3Cs to pursue profitable ventures and support their cause
Disadvantages of an L3C
- Uncertainties surrounding the L3C’s status leave foundations and investors unsure about investing
- Few states allow L3C formation
Anonymous LLC
An anonymous LLC enables you to form an LLC without listing the owners, managers or members in public state filings. Anonymous LLCs are also known as “confidential LLCs” and “private LLCs.” Delaware, New Mexico and Wyoming are the usual choices, while Nevada keeps members off formation documents but lists managers in its annual filings.
An anonymous LLC doesn’t guarantee complete anonymity. Your registered agent, the IRS and your bank still know who owns the company, and if someone sues the LLC, a court can order the owners to be identified. Since March 2025, FinCEN no longer requires U.S. companies to report their beneficial owners under the Corporate Transparency Act. An anonymous LLC pays taxes the same as any other LLC.
Advantages of an anonymous LLC
- It keeps your name and home address out of public business records
- It helps prevent others from gaining access to your data and using it to harass you
Disadvantages of an anonymous LLC
- It doesn’t hide your identity from the IRS, your bank or a court
- Registering in another state that requires owner names can make them public
Terms that aren’t LLC types
A few terms come up alongside LLC types but describe something else. Any of the 8 types above can use them.
Member-managed vs. manager-managed LLC
This is a management structure, and it applies to both single-member and multi-member LLCs. In a member-managed LLC, members manage the LLC themselves and can act on the company’s behalf as long as they follow the operating agreement.
A manager-managed LLC is a popular choice when some LLC members act passively, such as silent investors, or when the business needs outside managers with more experience. If you choose this structure, state it in your articles of organization and operating agreement.
LLC tax classifications
An LLC isn’t a tax category. By default, the IRS taxes a single-member LLC as a disregarded entity and a multi-member LLC as a partnership. Any LLC can instead elect to be taxed as a C corporation by filing Form 8832, or as an S corporation by filing Form 2553, without changing its legal structure. The guide to LLC taxes covers each option.
Restricted LLC, a Nevada designation
Nevada created the restricted LLC in 2009. It’s a regular Nevada LLC that elects restricted status in its articles of organization, and it’s used mainly for estate planning, not for day-to-day business. Under NRS 86.345, a restricted LLC by default can’t make distributions to its members until 10 years after it elects restricted status. Owners use that limit to support lower valuations when they gift membership interests to family, so talk to a tax professional before relying on it. Only Nevada offers this designation.
How to choose the right type of LLC for you
Most business owners have similar wants, needs and goals, but how they achieve them differs. That’s why it pays to choose the right type of LLC.
The procedure for registering each type of LLC is similar in most states. Where states differ is which types they recognize. The big question is what the best type of LLC for your business is, and the answer depends on what you want to accomplish. Start with these questions.
- How many owners will the business have? One owner means a single-member LLC, and two or more means a multi-member LLC.
- Where will you do business? Form a domestic LLC in your home state and register as a foreign LLC in any other state where you operate.
- Do you hold a professional license? Check whether your state requires a PLLC.
- Will you run several businesses or properties? A series LLC may cut filing and admin costs if your state allows it.
- Is your main purpose charitable? An L3C may fit, though a nonprofit is often the better route.
- Is privacy a priority? An anonymous LLC can help, within the limits described above.
Take your time; there’s no rush. You can usually add members, register in new states or change your tax election later, so choose the type of LLC that supports your business today.
FAQ
The main types are single-member, multi-member, domestic, foreign, series, professional (PLLC), low-profit (L3C) and anonymous LLCs. Each gives the same basic liability protection with different ownership, location or purpose rules.
A single-member LLC has one owner and is treated as a “disregarded entity” for federal tax purposes, allowing profits and losses to pass through directly to the owner’s personal tax return.
A multi-member LLC has two or more owners, is taxed as a partnership by default, and files Form 1065 with a Schedule K-1 for each member.
A series LLC allows a parent LLC to set up separate series, each with its own assets and liabilities, under one master LLC. This can lower administrative costs while keeping each series’ liabilities apart.
A PLLC is an LLC formed by licensed professionals, such as doctors, lawyers or architects, to meet state licensing rules while protecting members from business debts and other members’ malpractice.
A domestic LLC is formed and registered in its home state, while a foreign LLC is a domestic LLC that registers to do business in another state.
An L3C combines a profit-seeking LLC structure with a charitable or educational purpose, designed to attract program-related investments from private foundations as well as regular investors.
An anonymous LLC keeps owner and manager names out of public state filings, usually by forming in Delaware, New Mexico or Wyoming and using a registered agent’s address.
A restricted LLC is a Nevada LLC that, by default, can’t make distributions to its members for 10 years after electing restricted status. Owners use it mainly for estate planning, not for running a business.
Most small businesses start as a domestic single-member or multi-member LLC, depending on how many owners they have. Series LLCs, PLLCs and L3Cs only fit specific situations.
Yes, in most cases. You can add or remove members, register as a foreign LLC in a new state, or change your IRS tax classification without forming a new LLC.