The Internal Revenue Service (IRS) classifies a Limited Liability Company (LLC) based on the number of members it has and whether it elects to be treated differently. This classification applies to LLCs in Texas and throughout the United States. The default federal tax classifications for LLCs are as follows:
Single-Member LLCs - an LLC with only one member and does not pay taxes as a separate entity;
Multi-Member LLCs - an LLC with more than one member is treated as a partnership for federal tax purposes.