Limited Liability Company (LLC) Income

Limited Liability Companies

Limited Liability Companies (LLC) are not recognized as a unique business type by the Internal Revenue Service (IRS). Depending on the business structure, number of members, and/or elections made by the LLC, the IRS will treat the business as a corporation, partnership, or sole proprietor.

For SNAP purposes, you must determine what kind of business type the LLC is identifying as and follow the Online Guide procedures outlined for that business type.

If the client is being treated as a corporation you must process as outlined in C Corporation & S Corporation Income page.
If the business is being taxed as a sole proprietor or partnership you must process the income by following Self-employment guidelines.

LLC Examples

Example 1

Joanie is applying for SNAP. She shows that her business is a partnership business type. She provides verification that she has 50% ownership of Joanie and Jane’s Sandwiches and shares 50% of the business’ profit and loss.

Using the provided verifications, you must determine Joanie’s share of profit and loss and enter it as a self-employment record. You must give credit for all allowable business expenses.

Example 2

Kim’s Korner is a partnership business type. Kim submits an IRS Form 1065 for verification of income.

The form Kim submitted is the profit and loss of the entire business and does not indicate what portion of the business is Kim’s. Even if the 1065 form states that two Schedule K-1’s were filed, you cannot determine Kim’s true percentage of ownership. You must determine Kim’s percentage of ownership and calculate what portion of the total profit and loss is Kim’s, and enter it as a self-employment record. You must give credit for all allowable business expenses.

Example 3

Larry states he is 100% owner of Larry’s Lures. He submits a Schedule K-1 (1120S) for verification of income.