what is a disregarded entity llc

A disregarded entity LLC is a single-member limited liability company (LLC) that is disregarded as a separate entity for federal income tax purposes. This means that the owner of the LLC reports the income, losses, and credits of the LLC on their individual federal tax return, and the LLC is not taxed as an entity separate from the owner. A disregarded entity LLC is automatically classified as such by the IRS, and there are no steps to be taken to have the LLC classified as a disregarded entity for income tax purposes. The most common disregarded entity is a single-member LLC.