Question: I went to the bank to open my LLC bank account and they need to know what kind of LLC I have. The bank wanted to know if I have an S LLC, C LLC or partnership LLC.
Answer: You need to go to another bank that knows how to deal with LLCs. The State of Arizona only has two types of LLCs, i.e., an LLC and a professional LLC (PLLC). You have an LLC.
There are no such terms as S LLC, C LLC or partnership LLC. The person you are talking to is ignorant, which is troubling. He or she may be asking for the LLC’s tax method under the internal revenue code, which could be:
- Sole proprietorship
- C corporation
- S corporation or
Those terms refer to the four possible federal income tax methods availabe to LLCs under the Internal Revenue Code. The terms do not describe a type of LLC.
The bank does not need to know how the LLC is taxed. The default tax method for your two member LLC is partnership. The LLC will be taxed as a partnership unless it files a timely IRS form 8832 (election to be taxed as a C corporation) or an IRS form 2553 (election to be taxed as an S corporation). The subject of the four possible LLC tax methods is discussed in great detail in your Operations Manual in your LLC portfolio.