Tax Filing for LLCs
Do LLCs file separate tax returns? Except in the case of a single-member LLC, an LLC must file separate federal and state tax returns as a C corporation, an S corporation or a partnership.
The IRS regards the Series LLC as one big entity. This means each series within the structure is not considered separate companies and therefore does not require separate returns. You will have to declare any income you’ve gained from your Series LLC.
You can file LLC business taxes with your personal taxes unless you ask for the LLC to be treated as a corporation.
Regardless of your LLC’s tax classification, operating at a loss or having no income does not prevent you from filing a tax return. It is important by law for a limited liability company with expenses but no income to submit taxes.
There are reasons for filing a separate LLC tax return. Some LLC owners find it easier when the IRS treats their company as a "pass-through entity" since the IRS doesn’t want the LLC to file a separate tax return. Another reason is that a lender giving a loan to the LLC might ask that the LLC file a separate tax return to qualify for the business loan.
Filing a separate tax return may impact eligibility for state financial aid. LLCs can provide tax savings in certain situations, looked at by a tax expert case-by-case.
LLC Tax Classifications and Implications
If you want the IRS to tax your LLC as a C corporation, you’ll need to complete and submit Form 8832 to make this election with the IRS. You’ll then file Form 1120 annually for your business tax return. Opting for an S corporation status? You’ll file separate federal and state tax returns as an S corporation.
The IRS is fine with the income and expenses from the LLC being reported on the single member’s personal tax return. If the LLC is owned by two people with one being someone other than a spouse, it is a multi-member LLC and a separate tax return must be filed.
Tax Considerations for Business Owners
Are LLC taxed once or twice?
LLCs are taxed only once – at the individual level. The profits and losses of the LLC are reported on the owners’ personal tax returns. It is worth noting that LLCs have some flexibility in how they are taxed. By default, a single-member LLC is taxed as a sole proprietorship, while a multi-member LLC is taxed as a partnership. However, LLCs can also elect to be taxed as an S Corporation or a C Corporation.
For tax purposes, an LLC can be taxed as a sole proprietorship, general partnership, or corporation.
State-Specific Tax Information
What taxes do LLC pay in Pennsylvania?
- Self-employment tax (FICA, Social Security, Medicare) on earnings from the LLC, currently at 15.3%.
How are NYC LLCs taxed?
- No required federal or state income tax on New York LLCs and LLPs.
Additional Information on LLCs and Taxes
What type of business can be taxed twice?
- Double taxation applies to C corporations, where the corporation pays taxes on its profits, and stockholders pay taxes on dividends.
Is it better to be self-employed or LLC?
- Forming an LLC can save you money and provide personal asset protection. An LLC taxed as an S Corporation may avoid self-employment taxes.
LLCs and S Corporation Status
How does the LLC elect S Corporation status?
- LLCs elect S Corporation status by filing IRS Form 2553 by March 15 of the current tax year.
LLC Tax Deadlines
When are LLC Taxes Due?
- C Corporation or partnership: File taxes on April 15 for calendar tax year, or 15th day of the fourth month after fiscal year ends.
- S Corporation: File taxes on March 15.
Is an LLC by state or federal?
- LLCs are formed under the laws of a particular state, not under federal law.
Operating Agreements and Member Payments
How do I pay myself from my LLC?
- Pay income tax based on the LLC’s tax status, and report net income from Schedule C on the owner’s personal tax return.
How a Multiple-member LLC Pays Income Taxes
- An LLC with more than one member typically pays income tax as a partnership.
How LLC owners pay state taxes?
- LLC owners pay taxes to the state on their personal returns; the LLC itself does not pay a state tax.
Determining LLC Tax Status
What tax classifications determine how LLCs are taxed?
- LLCs can be taxed as one of the following: Sole proprietorship, Partnership, Corporation.
Understanding LLC Taxation
How LLCs are Taxed
- IRS will tax an LLC based on its number of members by default.
How does an LLC file taxes as a disregarded entity?
- Disregarded entity: LLC income and expenses go directly on the member’s tax return.
How to file taxes as a C corporation?
- Form 1120 is used to report the corporation’s financial activity and calculate its tax liability.
Is an LLC only taxed once?
- All profits are only taxed once, at each member’s individual income tax rate.