Hi Chris,
Generally speaking, there is no tax advantage to establishing an LLC since they are considered a disregarded entity. What this means is that unless an S-Corp election is also made, a Single Member LLC is taxed as a sole proprietorship just as if the LLC was not established. This is done by filing a Schedule C to claim the business income and expenses.
Multi-member LLC's are taxed as a partnership unless a S-Corp election is made. Partnerships must file a form 1065 to claim the business income and expenses, but do not pay taxes. Instead, K-1 is then issued to all partners that states their portion of income and expenses, and that flows through to their personal tax returns (generally as self employment income).
As I mentioned above, either can make an S-Corp election. S-Corps, like partnerships, do not pay taxes, but must file an 1120-S and issue a K-1 to all owners. In addition, S-Corps must pay their owners W-2 wages. These W-2 wages and K-1 earnings are reported on the individual tax return.
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