An LLC, or limited liability company, is a business structure created by individual states that has features similar to both a corporation and a partnership. Like a corporation, an LLC member has limited liability for the debts and actions of the LLC. Like a partnership, income and losses are passed through to the owners, rather than being the responsibility of the LLC itself. As such, the Internal Revenue Service does not recognize an LLC as a separate business entity, and LLC owners must categorize their company as a corporation, a partnership or a sole proprietorship for federal tax-filing purposes.
Things You'll Need
- Limited liability company
- IRS tax forms and schedules
Determine your filing status. If you are a single-member LLC, you can file with the IRS as a corporation or sole proprietor but not as a partnership. If you are a multiple-member LLC, you can file as a partnership or a corporation. You may want to consult with a tax adviser to determine what filing status offers you the most tax advantages.
Follow IRS regulations regarding how to correctly file LLC forms. If you are filing an individual LLC return, you should report LLC income and expenses directly on Form 1040 through the use of the appropriate schedule or schedules: C, "Profit or Loss from Business"; E, "Supplemental Income and Loss"; and F, "Profit or Loss from Farming." If you are filing your LLC taxes as a corporation, you should report LLC income and expenses on the corporate return, which is usually Form 1120 or Form 1120S, "U.S. Corporation Income Tax Return." If your LLC has more than one member, you must file a partnership return using Form 1065, "U.S. Return of Partnership Income."
Verify whether you have to pay self-employment taxes. Most members filing schedules C or E have to pay self-employment taxes. Members filing partnership returns generally have to pay self-employment taxes on their share of partnership earnings, although members classified as limited partners pay self-employment tax only if the LLC pays them for services.
- Photo Credit partnership image by Andrey Kiselev from Fotolia.com
Does an LLC Need a Separate Tax Return?
Though a limited liability company does not pay a corporate tax unless it elects to be taxed as a C corporation, in...
How to Report Income as an LLC Member
The limited liability company, or LLC, is a hybrid business entity created by state law. The Internal Revenue Service (IRS) does not...
How to Separate LLC & Personal Taxes
The taxes for an LLC, or limited liability company, are listed separately from your personal taxes. The company's structure -- whether it...
How Do I Do My Own S Corporation Taxes?
An S corporation is a small corporation that passes through gains and losses directly to its employees. Many S corporations have only...
Do I Pay Quarterly Social Security Tax if I Own an LLC?
Owners of a limited liability company, also called an LLC, have different tax responsibilities compared to a corporation. While an LLC is...
LLC and Payroll
An owner of a limited liability company, or LLC, is paid like an independent contractor, not an employee. If everyone who works...
As an LLC, Can I Pay Federal Taxes Quarterly?
One of the primary reasons that people use an LLC is the pass-through taxation that it provides. Instead of having to file...
What Tax Forms Are Needed for an LLC?
For the purposes of taxes, the government does not recognize a limited liability company (LLC). LLCs will be required to fill out...