This, is very misleading and will confuse a first-time business owner filling their own taxes for the first time
. LLCs can not be taxed "as" a sole proprietor. There are different types of LLC's. A multi-member LLC can not be taxed as a sole proprietor, because it is not a one owner business.
First, at the federal tax level, the only difference between a single member LLC and a sole proprietorship, is the spelling. Literally! As far as the IRS is concerned, they are disregarded entities for tax purposes.
A single member LLC can elect to be "treated like an S-Corp" by the IRS.
So with that said, a single member LLC or sole proprietorship will report Business income and expenses on a SCH C as a part of that single owner's personal tax return - be it a single or a joint return if the owner is married.
An S-Corp, C-Corp, multi-member LLC, partnership, joint venture and a few other business types to include a single member LLC that as specifically elected to be treated like an S-Corp by the IRS, will file a completely and physically separate tax return. Businesses organized in any of the aforementioned structures are treated as a completely separately taxable entity by the IRS.
Now at the state level if the state taxes income, there are some states (TN is one I think) that by state law, treats an LLC the same way the IRS treats an S-Corp. So that's why one really has to do their homework if their state taxes their return, to make sure their business is treated by the IRS, the same way it's treated by the state that business is registered in.
