One of the most advantageous aspects of the LLC is that it can choose how it is treated as a taxable entity. According to the IRS, an LLC is, by default, federally taxed as a partnership (in the case of a multi-member LLC) or as a sole proprietor (in the case of a single-member LLC). The LLC, however, may elect to be taxed as a C or S corporation at any time if the members so choose. This can be useful if the income from your business tends to fluctuate.