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Summary of Unemployment Insurance Tax Treatment of Limited Liability Partnerships (LLPs) and Limited Liability Companies (LLCs) under the Michigan Employment Security Act
| LIMITED LIABILITY COMPANIES (LLC) |
STRUCTURE OF ENTITY | TAXABILITY OF PAYMENTS MADE TO MEMBERS/OFFICER, DIRECTORS & PARTNERS | ENTITLEMENT TO UI BENEFITS | PERSONAL LIABILITY FOR UI TAXES |
| Two or more individual members | Payments to members are not taxable for UI purposes. | Members are not entitled to receive UI benefits. | Entity is liable for taxes. Members are not personally liable if acting lawfully and within scope of their authority. Members are personally liable for unlawful acts and willful failure to pay taxes due, up to the member's investment in the LLC. | |
| Single member LLC - individual | Payments to members are not taxable for UI purposes. | Members are not entitled to receive UI benefits. | ||
| Single member LLC - electing to file as corporation | Payments to members are not taxable for UI purposes. | Members are not entitled to receive benefits. | ||
| Single member LLC - Corporation (owned by a corporation) | Officers/Directors who perform services for the LLC or corporation are employees and payments to them are taxable. | Officers/Directors who perform services for the LLC are employees, and therefore are entitled to UI benefits if eligible and qualified. | ||
| LIMITED LIABILITY PARTNERSHIP (LLP) | Payments to partners are not taxable. | Partners are not entitled to receive UI benefits. | Partners are personally liable for the tax obligations of the LLP. |