The IRS treats one-member LLCs as sole proprietorships for tax purposes. This means that the LLC itself does not pay taxes and does not have to file a return with the IRS. As the sole owner of your LLC, you must report all profits (or losses) of the LLC on Schedule C and submit it with your 1040 tax return.
You’ll need to deposit your payroll taxes throughout the year according to the schedule set by the IRS. Deposits can be made on the Electronic Federal Tax Payment System (EFTPS).
If you fail to file your taxes on time, you’ll likely encounter a Failure to File Penalty. The penalty for failing to file represents 5% of your unpaid tax liability for each month your return is late, up to 25% of your total unpaid taxes.
An LLC with no business activity that is taxed as a partnership is not required to file a partnership tax return unless there are expenses or credits that the LLC wants to claim.
You must file Form 8832 (Entity Classification Election) to inform the IRS which tax category you want to select for your company and obtain an Employer Identification Number (EIN) as a unique identification number issued by the IRS to identify your LLC for tax purposes.
If an LLC would like to be taxed as a C-Corporation, it must file Form 8832. You will also need to distribute Schedule K-1 to all LLC members and owners if you elect to be treated as an S corporation because the S corporation doesn’t actually file its own taxes.