A Limited Liability Company is a business structure allowed by state statute. Each state may use different regulations.
The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS. As the sole owner of your LLC, you must report all profits (or losses) of the LLC on your 1040 tax return.
The IRS looks at co-owned LLCs as partnerships for tax purposes. Like single-member LLCs, co-owned LLCs do not pay taxes on business income; instead, the LLC owners each pay taxes on their share of the profits on their personal income tax returns.