Disregarded entity
In accounting, disregarded entity means an eligible entity with one owner that has not elected to be a corporation, ignored for income tax so its results go on the owner's return — Schedule C for an individual owner. It is still a separate legal entity, and still the employer for employment taxes.
Also called Single-member LLC.
Authority: Treas. Reg. §301.7701-2(c)(2)(iv) (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- EntitiesThe entity menu › Limited liability company (LLC)A state-law shield with no federal tax category of its own: disregarded, a partnership, or a corporation by election.5 min
- EntitiesUS companies for founders abroad › A foreign-owned LLCDisregarded for income tax, a corporation for Form 5472: the pro forma 1120 a foreign owner can't skip.2 min
- EntitiesParents, subsidiaries and groupsDisregarded, consolidated or separate: how a subsidiary is taxed, and a $12,000 intercompany fee booked in each entity and eliminated in the group.8 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- sole proprietorship (which has no entity and no liability shield)
Also in Entity types
Defined in Lexicon. This page is generated from that document, so the two can't disagree.