Overview
The LLC Membership Tier is built for business owners who operate as single-member LLCs (SMLLCs). This article covers what the tier includes, what it doesn't, and how taxes work when your business is structured this way.
If you've elected S Corp status, this tier doesn't apply to you. See the S Corp Membership Tier Overview instead.
Getting your structure right from the start shapes everything that follows: how you pay yourself, how you file, and how much administrative work your business carries. The LLC tier is designed to keep that work light while your books, invoicing, and personal tax filing stay handled in one place.
Who it's for
This tier is a fit for:
- Founders, freelancers, and consultants who want to form an SMLLC or already have one
- Solopreneurs who want bookkeeping and tax filing in one system rather than stitched together
- Self-employed individuals who want year-round support staying organized and tax-ready
What's included
- LLC formation and EIN application for new businesses. Collective handles the required state and IRS filings using the information you provide.
- Operating agreement template, available on request. If you don't have one, your Collective team will help build one for your business.
- Registered agent service covering one state. Additional states are available for an added fee.
- Automated bookkeeping, including transaction import, categorization, and monthly reconciliations.
- End-of-year book cleanup. Your books are rebuilt starting from the later of January 1 of the current tax year or your LLC formation date. If your LLC was formed in March, cleanup starts in March. If it was formed in a prior year, cleanup starts January 1.
- Integrated invoicing with custom branding and Stripe payments.
- Individual Tax Return (ITR) preparation and filing, meaning your personal return (Form 1040) with Schedule C, plus one state filing. This covers the tax year in which you're a member. Join partway through a year, and Collective prepares that year's return, filed the following spring.
- California Form 568 at no additional cost for California SMLLCs required to file it.
- Quarterly estimated tax calculations with reminders ahead of IRS and state deadlines.
- AI-powered support assistant for on-demand answers on bookkeeping, tax, and filing deadlines.
- Collective community and self-employed resources.
What's not included
This tier does not include payroll setup or W-2 salary support, and Collective does not support additional W-2 employees at this time.
It also does not include a separate Business Tax Return (BTR). SMLLCs report business income and expenses directly on the personal return, so there's no second return to file.
As an SMLLC owner, you aren't required to pay yourself through formal payroll. Instead you take owner distributions, which are transfers from your business bank account to your personal account.
Pricing
LLC Membership is billed monthly, with a discounted rate available when you pay annually. A one-time onboarding fee applies when you join, and state LLC formation fees are passed through at cost when applicable.
For current pricing, see the membership page on collective.com or check the plan details in your Collective dashboard.
Frequently asked questions
What's the difference between the LLC and S Corp tiers?
Both include business setup, bookkeeping, invoicing, and tax support. The difference comes down to how you pay yourself, how your business income is reported, and how much administrative support that structure requires.
LLC tier. Built for SMLLCs taxed as sole proprietors. You don't run payroll to pay yourself, and your business activity is reported on your personal return using Schedule C. With no separate business return and no payroll requirement, the workflow is simpler and the price is lower.
S Corp tier. Built for members who have elected, or want to elect, S Corp tax status. That structure requires paying yourself a reasonable salary through payroll and filing a separate business return each year. To support that, the S Corp tier adds:
- Payroll platform setup and management
- Ongoing payroll processing
- Quarterly payroll tax filings
- Preparation and filing of the annual Business Tax Return (BTR), Form 1120-S
In short, LLC membership covers your books and your personal filing. S Corp membership adds payroll and business tax filings on top.
Do I need payroll as an LLC?
No. SMLLC owners don't run payroll for themselves and don't receive W-2 wages. You pay yourself through owner's distributions, by transferring funds from your business account to your personal account.
Because distributions aren't wages, no tax is withheld when you take one. You'll owe income tax and self-employment tax on your business profits, and you cover both through quarterly estimated payments during the year. That's why the estimated payment schedule matters more for LLC owners than it does for someone on a payroll.
How will I pay taxes on my LLC income?
For tax purposes, an SMLLC is generally treated as a disregarded entity, meaning the IRS doesn't tax the business separately from you. Profits pass through to your personal return. In practice:
- Report business income and expenses on Schedule C, filed as part of your Form 1040.
- Make quarterly estimated tax payments during the year to cover income tax and self-employment tax, which is currently 15.3% on net self-employment earnings up to the annual Social Security wage base.
- Follow the guidance in your dashboard. Collective's Quarterly Tax Estimate (QTE) tool calculates your recommended payment, so you know how much to send, when it's due, and where to submit it.
I don't have a business formed yet. Can Collective form my LLC?
Yes. Collective helps you form your LLC and obtain your EIN, handling the required state and IRS filings using the information you provide. Your membership includes registered agent service in one state, so official notices are received on your behalf.
State filing fees vary and are passed through at cost.
If I already have an LLC, can I join under the LLC tier?
Yes, as long as you haven't elected S Corp status. Collective will help you bring your existing LLC into the platform and get your books up to date.
If your entity isn't currently in good standing with your state, your Collective team will let you know what's needed to resolve it. Requirements vary by state.
What tax filings are included?
Included: your Individual Tax Return (Form 1040) with one Schedule C, plus one state filing. More complex returns may be subject to additional fees.
Included for California members: California Form 568 for state LLC reporting.
Not included: S Corp returns (Form 1120-S), partnership returns (Form 1065), and corporate returns.
Do I get bookkeeping and invoicing tools?
Yes. Your membership includes:
- Connection of your business bank and credit card accounts
- Automated bookkeeping, including transaction import, categorization, and reconciliations
- Built-in invoicing with Stripe payments
- Real-time visibility into your Profit & Loss, Balance Sheet, Cash Flow Statement, and Trial Balance
Staying connected to these numbers year-round, rather than only at tax time, is what makes the difference between reacting to your finances and making decisions with them.
What support do I get?
You have access to the AI-powered support assistant for instant answers, and to your Collective team of LLC and S Corp specialists when a question needs a person. Reaching out early on something you're unsure about is a smart move, not a sign you're behind.
When does the LLC tier make sense versus S Corp?
The LLC tier fits business owners who don't yet need the structure and filings an S Corp requires. For many businesses, staying an LLC stays simpler and more cost-effective when:
- Net profit is roughly under $60K to $80K
- You have significant W-2 income from another job
- You operate in a state where S Corp treatment is less favorable, such as New York City
These are guidelines, not rules. The IRS doesn't set an income threshold for S Corp eligibility. The thresholds above reflect the point where the added administrative work of an S Corp is more likely to be worth it. Your own numbers, state, and plans for the business all factor in.
The LLC tier keeps the workflow light, with no payroll setup and no separate business return, while still covering bookkeeping, estimated tax calculations, and personal tax filing.
Can I have employees as an LLC?
An LLC can generally hire employees, but Collective does not support additional W-2 employees at this time. This membership is built for single-member businesses without staff payroll.
If you're planning to hire, reach out to your Collective team before you do so you understand how it affects your setup.
What about independent contractors?
You can work with independent contractors and pay them however you prefer, including Zelle, PayPal, Venmo, or check. We recommend paying all contractors from your business checking account so your bookkeeping and documentation stay clean.
If you pay a contractor above the current reporting threshold during the year, you may be required to file Form 1099-NEC.
I'm already an S Corp with Collective. Can I switch to the LLC tier?
If you're an S Corp member today, nothing about your current membership changes. The LLC tier was added to serve more types of business owners, including those who haven't elected S Corp status.
Moving from S Corp back to SMLLC treatment isn't a plan change, though. It's a change to how the IRS taxes your business, and it takes several formal steps:
- Submitting a formal revocation of your S Corp election to the IRS
- Making a new election for disregarded (single-member LLC) treatment, which does not happen automatically
- Understanding that without a new election, the business defaults to C Corp taxation at the flat federal corporate rate
- Managing mid-year complications, including final and partial-year S Corp returns
- Separating bookkeeping and income reporting between the S Corp period and post-revocation LLC activity
There's also a timing consideration. Once an S Corp election is revoked, the IRS generally won't allow you to re-elect S Corp status for five years without special permission.
At this time, Collective cannot support the filings and bookkeeping work an S Corp revocation requires. If you're considering it, talk with your Collective team first. They can walk through what your situation would involve and point you toward the right outside resource.
Next steps
If you're ready to get started, head to your Collective dashboard to complete onboarding and connect your accounts.
If you're weighing LLC against S Corp for your business, reach out to your Collective team. They can look at your actual numbers and talk through what makes sense.
The information contained in this article is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.