First you need to realize that an LLC is a legal entity and the way itu2019s taxed depends on whether it consists of a single member or multiple members. A single member LLC is considered by the IRS to be a u201cdisregarded entityu201d which means that the business income and expenses get reported on your individualu00a0 Schedule C,E, or F (depending on the type of business) and the results u201cpass-throughu201d to your Form 1040.u00a0 The result is that your business income gets added to all your other types of income to compute your tax liability.If you have a multiple member LLC you can choose to be taxed as a partnership or a corporation.If you choose partnership taxation, the business will file Form 1065 and items of income and expense will u201cpass-throughu201d to the partners via Schedule K-1 which then flows to Schedule E on your personal tax return.If you choose corporate taxation and meet the requirements to be an S corporation, you can file Form 1120S which lets the business profit u201cpass-throughu201d via Schedule K-1.Basically, what u201cpass-throughu201d taxation means is that the business is a reporting entity only, NOT a tax-paying entity.u00a0 The business income passes through to the individual business owner who must pay taxes on it.This is not the case for a multiple member LLC who chooses to be taxed as a C (or regular) corporation because that entity IS a tax-paying entity.