How does net income from a business typically get taxed in an LLC?

In a Limited Liability Company (LLC), net income is typically taxed only once because the structure allows for pass-through taxation. This means that the income generated by the LLC is not taxed at the entity level but instead passes through to the individual members, who report it on their personal tax returns. As a result, the income is taxed according to the individual members' tax brackets, avoiding the double taxation typically associated with corporations, where income is taxed both at the corporate level and again when distributed as dividends to shareholders.

This single layer of taxation makes it advantageous for many small businesses and entrepreneurs, as it simplifies the tax process and can potentially reduce the overall tax burden compared to traditional corporations. Thus, when net income is generated by an LLC, it is taxed only once at the personal level, affirming why the answer is correct.