A Limited Liability Company (LLC) is a type of business entity that is created by a state statute in the US. This type of structure does not exist in Canada. You cannot create a Limited Liability Company in Canada, however, you can still use a US LLC to conduct business in Canada.
Generally, for tax purposes in the United States, an LLC with one member is considered as a disregarded entity. The phrase disregarded entity means that LLC is disregarded as an entity that is separate from its owner. A disregarded entity is considered to be part of its owner’s tax return. If an LLC has two or more members it is considered as a partnership.
An LLC can elect to be taxed as a corporation by filing Form 8832 with IRS. This is also known as “check the box” which refers to checking the box on the form to make this election.
In the US, when an LLC is not treated as a corporation, its income flows through to the personal tax returns of the owners. It might sound confusing! Legally, all the assets are owned by LLC which limits the liability, however, for income tax purposes all the assets belong to the owner(s).