Final answer:
Most LLCs choose to be taxed like partnerships or sole proprietorships to avoid double taxation and benefit from limited liability, combining flexibility with tax efficiencies.
Step-by-step explanation:
The vast majority of limited liability companies (LLCs) elect to be taxed as either a sole proprietorship if owned by one individual or a partnership if owned by multiple individuals. This is typical because LLCs combine the benefits of limited liability offered by a corporation with the tax efficiencies and operational flexibility of a partnership or sole proprietorship. LLCs are subject to little government regulation, which makes them a flexible option for many business owners. The LLC structure allows owners to avoid double taxation that is often associated with corporations, as the company itself does not pay taxes. Instead, profits and losses pass through to the individual members who then report this income on their personal tax returns.