LLC Tax Filing Guide

The legal protections of an LLC may have convinced you to choose it for your business. Now that tax season is here, you need to think about your LLC taxes, too.

Don’t stress. Hundreds of LLC members find themselves in the same boat every year—so we’ve created this LLC tax guide to help demystify business taxes for LLCs. At Gordon Law, we make complex tax filings simple and stress-free! 

In this article, we’ll run through the different kinds of LLC tax forms, key deadlines, and how to file your LLC taxes.

If you find that you are in over your head and need more assistance with your LLC taxes, Gordon Law can help. Every year, we help LLC members file their business taxes and advise on tax considerations that can save your business money.

LLC Tax Treatment

One common misconception about LLCs that most people are surprised to learn is that they are not all taxed the same. LLCs have the option on the federal level to elect different tax treatments. LLCs can be taxed as any of the following:

  • Sole Proprietorship
  • Partnership
  • S corporation
  • C corporation

Let’s go through each option in more detail. If you’re not sure which tax classification you have, you can call the IRS at 800-829-4933 to find out; be sure to have your TIN or EIN ready.

Sole Proprietorship

For single-member LLCs, the default tax treatment is a sole proprietorship. Sole proprietorships are pass-through entities, which means the income and expenses from your LLC are not taxed at the LLC entity level. Instead, they are reported on the sole proprietor’s individual tax return.

Here’s what you need to know about sole proprietorship LLC tax filing.

  • Tax Form: The LLC tax form for one taxed as a sole proprietorship is simply Schedule C of the individual tax return, Profit or Loss From Business. On this schedule, you report to the IRS your gross income, along with any necessary and reasonable expenses your business incurred during the year. 
  • Tax Deadline: Since you report the LLC activity on your individual tax return, the due date for the LLC tax form is the same as Form 1040. For most people, this is April 15th.

Partnership

Just like the default tax treatment for a single-member LLC is a sole proprietorship, the default for a multi-member LLC is a partnership. Partnerships are also considered pass-through entities. 

Here’s what you need to know about partnership LLC tax filing.

  • Tax Forms: 
    • Form 1065: The partnership tax form is separate from the individual tax form. The LLC tax form for a partnership is Form 1065, U.S. Return of Partnership Income. On Form 1065, LLCs report their income and expenses during the year, along with other information like their assets and liabilities. 
    • Schedule K-1: The partnership then reports each partner’s share of the LLC’s net income on Schedule K-1. 
    • Schedule C, Form 1040: Members use Schedule K-1 to report the partnership income on Schedule C of their individual tax returns.
  • Tax Deadlines: 
    • Form 1065: Form 1065 is due on the 15th of the third month following the end of the partnership’s tax year. For calendar year partnerships, this is March 15th.
    • Schedule K-1: Schedule K-1 is due on March 15th.
    • Schedule C, Form 1040: The individual tax return, including Schedule C, is typically due on April 15th.

S-Corp

Not all LLCs choose to follow the default tax treatment. For some, electing S-Corp status is the better option. Single-member and multi-member LLCs can elect S-Corp status if they meet the requirements, which can lead to tax savings. S-Corps are also pass-through entities with their own LLC tax form. 

Here’s what you need to know about S-corp LLC tax filing.

  • Tax Forms: 
    • Form 1120-S: The S-Corp LLC tax form is Form 1120-S, U.S. Income Tax Return for an S Corporation. LLCs report the S-Corp income, expenses, assets, and liabilities on this tax form. 
    • Schedule K-1: Each shareholder’s portion of the income and expenses is then reported on a Schedule K-1, which shareholders use to transfer the information to their individual tax returns.
    • Schedule C, Form 1040: Members report their business income on Schedule C of their individual tax returns.
  • Tax Deadlines: 
    • Form 1120-S: Form 1120-S is due by the 15th day of the 4th month after the end of the tax year. For calendar year filers, this is April 15th.
    • Schedule K-1: Schedule K-1 is due on March 15th.
    • Schedule C, Form 1040: The individual tax return, including Schedule C, is typically due on April 15th.

C-Corp

Finally, the last federal tax option for an LLC is a C corporation. Unlike the other options, C corporations are not pass-through entities. This means the LLC is taxed at the entity level. 

Here’s what you need to know about C-corp LLC tax filing.

  • Tax Forms:
    • Form 1120: LLCs taxed as C corporations must file Form 1120, U.S. Corporation Income Tax Return. The activity from the LLC, including the income, expenses, assets, and liabilities, are reported on this form. The LLC then pays a corporate income tax on its taxable income at the corporate tax rate. 
    • Form 1099-DIV: If the LLC makes distributions to the individual shareholders, those dividends are reported on Form 1099-DIV.
    • Schedule B, Form 1040: Shareholders use Form 1099-DIV to report corporate dividends on lines 3a or 3b of their individual tax returns; they may need to attach Schedule B, as well. Dividends are double taxed, at both the entity level and the individual level.
  • Tax Deadlines:
    • Form 1120: Form 1120 is due on the 15th of the fourth month following the end of the corporation’s tax year. This translates to April 15th for all calendar year LLCs.
    • Form 1099-DIV: C-corps must send Form 1099-DIV to shareholders by January 31st. Paper filing to the IRS is due February 28th, and e-filing to the IRS is due March 31st. 
    • Schedule B, Form 1040: The individual tax return, including Schedule B, is typically due on April 15th.

State Tax Considerations

So, everything we just talked about above is the federal tax treatment for LLCs. Most LLCs have to keep in mind their state tax obligations, too.

Luckily, most states follow the federal tax classification for LLCs, so if you file as an S-Corp for federal tax purposes, the LLC will be taxed the same way on the state level. Things can get tricky, though, because some states do not follow the federal treatment. This is usually something to think about before you make an entity election for your LLC.

Additionally, you may have filing obligations beyond the state where your business is located. You may have LLC filings in multiple states if you are a multi-member LLC with members in different parts of the country or if you do business in more than one state.

Let Us Help Make Your LLC Tax Filing Easier

Does filing business taxes for your LLC sound complicated? Well, it doesn’t have to be. 

Gordon Law has helped business owners like you simplify their taxes and maximize their savings since 2012. With a team of experienced tax attorneys and accountants on your side, you don’t have to worry about your tax preparation or missing another deadline. Reach out today for the ultimate peace of mind!


Sources: