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LLC Taxation

How are LLCs taxed and what forms do you need to file? Below is a brief discussion on the three most common formats:

LLC taxed as Sole Proprietorship

If you are the only owner, member, or equity partner of your LLC, then you would be filing your LLC business numbers on from 1040, Schedule C. This is a component of your individual tax return and is not necessarily a separate return at the federal level, although it does involve separate schedules. On the state side, you may or may not have an annual reporting requirement or separate form to submit, depending on your state. We are happy to assist with LLCs registered in any of the 50 states.

LLC taxed as Partnership

If your LLC has more than one owner, partner, or member, you would be filing as a Partnership on Federal Form 1065 and any applicable state forms. We support returns in all 50 states. The state may also have an additional LLC reporting requirement. The 1065 return is a separate return altogether that will generate K-1s, which must then be input into each owner’s individual return. We will be happy to assist with both your partnership and individual returns, if necessary. There are also very specific tax strategies to keep in mind.

LLC taxed as an S-Corp

The S-Corp classification must be applied for with the IRS. The purpose of converting to an S-Corp is to take advantage of decreased self-employment taxes. This is the primary reason why persons choose the S-Corp structure. In order to take advantage of this tax strategy, an S-Corp election must be filed and approved by the IRS based on specific terms. Please contact us if you need assistance with this.