Single-Member LLC in Indiana — Formation & Tax Guide

A single-member Indiana LLC has one owner and provides the simplest structure with full liability protection. The IRS treats it as a "disregarded entity" — same tax filing as a sole proprietorship but with legal separation from your personal assets. For formation, see how to form an Indiana LLC. For all types, see our overview.

Tax Treatment

Federal: Schedule C on your Form 1040 (disregarded entity) Indiana: Report on IT-40 at 2.95% + your county income tax rate Self-employment tax: 15.3% on net earnings (federal) S-corp election: Available once income exceeds $50K-$60K

Liability Protection

Indiana Business Flexibility Act protects single-member LLC owners:

• Members not personally liable for LLC obligations
• Charging order protection limits creditor remedies
• Must maintain separation (separate bank account, operating agreement, filed reports)

Operating Agreement

Even with one member, you need an operating agreement:

• Banks require it to open business accounts
• Courts examine it in veil-piercing claims
• Documents the entity's separate existence
• Addresses succession if you're incapacitated

FAQ

Is a single-member LLC the same as sole proprietorship?

Legally: no (LLC has liability protection). Tax-wise: yes by default (same Schedule C filing). You get protection without changing your tax situation.

What if I add a partner?

Becomes multi-member. Tax changes from disregarded entity to partnership (Form 1065/IT-65). Update operating agreement.