LLC Tax Filing Guide: The Complete Overview

LLCs offer unique tax flexibility. By default, they are taxed as pass-through entities, but you can also elect to be taxed as a corporation.

By default, the IRS doesn't recognize LLCs as a separate tax-paying entity. Instead, LLCs are taxed based on the number of members they have.

• Single-Member LLCs: Are taxed as "disregarded entities" (sole proprietorships).
• Multi-Member LLCs: Are taxed as partnerships.

This is called pass-through taxation because the business profits are "passed through" to the owners' personal tax returns. The LLC itself does not pay income taxes.

If you are the sole owner of an LLC, the IRS treats it as a "disregarded entity." Business income and expenses are reported on your personal tax return.

How to Report

Your LLC's income and expenses are reported on Schedule C (Profit or Loss From Business), which is attached to your Form 1040.

Taxes You'll Pay

• Income Tax: Income tax on your net profit at your individual tax rate.
• Self-Employment Tax (15.3%): Self-employment taxes on your net profit.

Quarterly Estimated Tax Payments

Since taxes aren't withheld from your LLC income, you'll likely need to make quarterly estimated tax payments to avoid penalties.

An LLC with two or more members is taxed as a partnership by default. The LLC files an informational return, and each member reports their share on their personal return.

How to Report

• The LLC files Form 1065 (U.S. Return of Partnership Income).
• Each member receives a Schedule K-1 showing their share of the income, deductions, and credits.
• Members report K-1 information on their individual Form 1040.

Important Dates

• Form 1065 Due Date: March 15
• Schedule K-1s to Members Due Date: Same as Form 1065
• Individual Tax Return Due Date: April 15