If an LLC has only one owner, what is its default tax treatment if no election is made?

An LLC with only one owner is classified as a "disregarded entity" by default under tax law if no election is made. This means that for federal tax purposes, the LLC is treated as a sole proprietorship. The owner reports income and expenses from the LLC on their personal tax return using Schedule C. This treatment simplifies the tax implications for single-member LLCs, allowing them to avoid the complexities of corporate taxation, such as double taxation that can occur with corporations.

The default classification as a sole proprietorship provides tax benefits for the individual owner, including the avoidance of separate corporate income tax filings. Therefore, unless the owner elects to be taxed as a corporation, the single-member LLC automatically enjoys the treatment of a sole proprietorship in terms of federal income tax.