How an LLC Affects Personal Taxes
An LLC is typically treated as a pass-through entity for federal income tax purposes. Members pay taxes on their share of profits. Members can choose for the LLC to be taxed as a corporation.
Managing LLC Income Tax
- LLC owners pay taxes on their share of profits.
- LLCs can elect to be taxed as an S corporation.
- Income taxes for single-member LLCs reported on member’s tax return.
Tax Efficiency for LLC Owners
For most businesses, paying yourself a designated salary minimizes tax liability.
Filing Taxes as an LLC Owner
- An LLC can help shield business owners from personal liability.
- Deduct business expenses on personal tax returns through an LLC.
- LLCs don’t pay corporate federal income taxes.
- Owners pay taxes based on personal rates.
- LLC’s income only taxed once on personal tax return.
LLC Business Structure and Tax Implications
- LLC owners do not pay corporate federal income taxes.
- LLC does not pay income taxes; income passed to members.
- LLCs can be taxed as S corporations for tax savings.
- LLCs write off expenses as business tax deductions.
- Partnerships and sole proprietorships also pay taxes as pass-through entities.