When do llc need to file taxes

There are several types of LLC taxes. The federal government, as well as state and local governments, levy these taxes. All LLC members are responsible for paying income tax on any income they earn from the LLC as well as self-employment taxes. Depending on what you sell and whether you employ anyone, you might also be responsible for paying payroll taxes and sales taxes. To complicate things even more, an LLC can opt to be taxed as a different business entity.

Understanding your tax burden in advance can help you make smarter financial decisions. Federal, state, and local income taxes represent the biggest burden for most business owners. If, after deducting business expenses, the LLC generates a profit for the year, the owner will owe taxes to the IRS in accordance with their personal income tax rate.

This process generally works the same way at the state and local level. For example, a single owner of a New York City LLC will report business income on their federal and state personal tax returns. Some states charge a separate LLC tax or fee. Take these LLC taxes into account when selecting your business structure and making budgeting decisions.

Multi-member LLCs are treated as pass-through entities for federal income tax purposes. Each owner can also claim half of the tax deductions and tax credits that the LLC is eligible for, and write off half of the losses. This type of taxation works almost exactly like a partnership.

Pass-through taxation continues at the state and local levels. Most states have their own equivalent of Form and Schedule K As mentioned above, a few states like California charge additional LLC taxes. The members of an LLC can choose for the business to be classified as a C-corporation or S-corporation for tax purposes. The voting procedure and consent required to make this change will be reflected in the LLC operating agreement.

Your LLC can opt to be taxed as a C-corporation by filing Form with the IRS your state might also require additional forms for a change in tax status.

A business owner can choose how to have their LLC taxed. It can either be taxed as a sole proprietorship one owner , partnership two or more owners , or corporation any number of owners. But not to worry, the below section covers the income tax requirements for all three types.

If you are the one and only member of your LLC, the IRS will treat your tax status as a disregarded entity unless you elect otherwise. So your tax status will look very similar to a sole proprietorship i. Any profits or losses pass through to you as the owner. That amount will then be included as income or loss on your personal tax return Form If more than one person owns the LLC, the default tax status is to be treated as a partnership.

The LLC will need to fill out a partnership information return, Form Form and Schedule K-1 are due by March Reporting that information on your Form and Schedule E are due by May As an LLC you do have flexibility with your tax status.

You can stick with the default options listed above, or you can elect to file as a C corporation or an S corporation. About the Author Jane Haskins, Esq. Related Topics. Facebook Twitter. This portion of the site is for informational purposes only. The content is not legal advice.

The statements and opinions are the expression of the author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law. You may also like. Starting a Business How to Pay Yourself in an LLC As a business owner, you have many options for paying yourself, but each comes with tax implications. Managing Your Business How to File LLC Taxes If your business is organized as an LLC, it may be taxed as a sole proprietorship, a partnership, or a corporation, and you may be responsible for self-employment taxes in addition to federal and state income tax.

Starting a Business 3 Ways to Register a Business Name Forming certain business entities, filing an assumed name, or registering a trademark can afford you business name protection. Starting a Business S Corp vs. Additional taxes in some states. A few states, however, do charge the LLC a tax based on the amount of income the LLC makes, in addition to the income tax its owners pay. Annual fees in some states. In addition, some states impose an annual LLC fee that is not income-related.

This may be called a "franchise tax," an "annual registration fee" or a "renewal fee. For more information, check the website of your state's secretary of state, department of corporations, or department of revenue or tax. The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or will be formed by use of the site. The attorney listings on this site are paid attorney advertising.

In some states, the information on this website may be considered a lawyer referral service. Please reference the Terms of Use and the Supplemental Terms for specific information related to your state. Grow Your Legal Practice. Meet the Editors. LLC owners report business income and losses on their personal tax returns. What would you like to name your LLC?