A single-member LLC provides limited liability with minimal administration, and that minimalism is also its principal risk.

Tax treatment. Disregarded for federal income tax purposes by default, reported on the owner’s return, with an election available to be taxed as a corporation. It remains a separate entity for liability, employment tax and state law purposes.

Veil piercing. Courts examine commingling of funds, use of the entity to pay personal expenses, undercapitalization, and whether the entity was operated as a distinct business. Failure to observe internal formalities is expressly excluded as a ground in several statutes, which narrows the analysis to the financial separations — and makes those decisive.

Charging order protection may be weaker than for multi-member entities, as several courts have permitted foreclosure of the membership interest where no other member requires protection.

Practical requirements. A written operating agreement, even with one member, because lenders, title companies and courts ask for it and because it documents authority. A separate bank account, always. Distributions taken as distributions and recorded. Contracts signed in the entity’s name with the signer’s title.

Succession. Provisions addressing what happens on the member’s death or incapacity, since without them the entity may dissolve or be paralysed while an estate is administered.