TIP #0760BB-01
DATE ISSUED: January 12, 2007
UNEMPLOYMENT TAX
SINGLE MEMBER LIMITED LIABILITY COMPANIES
Section 443.036(20)(d), Florida Statutes (F.S.), (2003) provides that a limited liability company (LLC) shall be treated as having the same status as it is classified for federal income tax purposes.
Under the Internal Revenue Code, a single member LLC is ignored or "disregarded" for federal income tax purposes unless an election is made to treat the single member LLC as a corporation.
Absent that election, if the owner of the single member LLC is an individual, the income and expenses of the single member LLC are reported on the individual's federal income tax return, federal form 1040, Schedule C, E, or F. Wages to persons other than the owner must be reported for Florida unemployment tax, unless those wages are exempt per s. 443.1216(13), F.S. Typical examples of exempt wages of this type of single member LLC are those wages paid to the individual's spouse, son or daughter under the age of 21 (including step relationships), or to the individual's mother or father (including step relationships).
Absent that election, if the owner of the single member LLC is a corporation, the income and expenses of the single member LLC are reported on the corporation's federal income tax return, usually federal form 1120 or 1120S. Once the reporting responsibility has been established, wages to all persons must be reported for Florida unemployment tax, unless those wages are exempt per s. 443.1216(13), F.S.
A partnership cannot be a single member LLC because there is more than one member.
If the single member LLC elects to be treated as a "disregarded" entity and the owner (individual or corporation) does not already have a Florida unemployment tax account, the owner will need to register for unemployment tax under the owner's own name and will report the employees and wages of the single member LLC under the owner's name, EIN, and unemployment account number. If the owner already has a Florida unemployment tax account, the owner will report the employees and wages of the single member LLC under the owner's name, EIN, and unemployment account number.
Also note that a member of a LLC, just like an officer of a corporation, is deemed to be an employee if the member performs services for the LLC. When defining an "employing unit," section 443.036(20)(c), F.S., provides:
A person who is an officer of a corporation, or a member of a limited liability company classified as a corporation for federal income tax purposes, and who performs services for the corporation or limited liability company in this state, regardless of whether those services are continuous, is deemed an employee of the corporation or the limited liability company during all of each week of his or her tenure of office, regardless of whether he or she is compensated for those services. Services are presumed to be rendered for the corporation in cases in which the officer is compensated by means other than dividends upon shares of stock of the corporation owned by him or her.
If the single member LLC elects to be treated as a corporation, the single member LLC would need to register for unemployment tax under the single member LLC's name and EIN and would report the employees and wages of the single member LLC under the single member LLC's unemployment account number and EIN, not the unemployment account number and EIN of the owner's unemployment tax account.
FOR MORE INFORMATION
This document is intended to alert you to the requirements contained in Florida laws and administrative rules. It does not by its own effect create rights or require compliance.
For forms and other information, visit our Internet site at www.myflorida.com/dor or call Taxpayer Services, 8:00 a.m., to 7:00 p.m., ET, Monday through Friday, excluding holidays, at 800-352-3671.
Persons with hearing or speech impairments may call our TDD at 800-367-8331 or 850-922-1115.
For a detailed written response to your questions, write the Florida Department of Revenue, Taxpayer Services, 1379 Blountstown Highway, Tallahassee, FL 32304-2716.