How to File Taxes for an LLC Company

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How you file taxes for an LLC depends on how the business is treated by the IRS. A single-member LLC is treated as a sole proprietorship, and an LLC with more than one member is treated as a partnership by default, but either type of entity can elect to be taxed as a corporation and, if it qualifies, further choose be taxed as an S Corp.

Single-member LLC

Report business income or loss on Schedule C, and attach it your individual Form 1040. If the company has passive income, such as from rents, royalties or trusts, complete and attach Schedule E. These schedules will provide amounts necessary for completing your 1040.

Pay self-employment tax. If your net gain from the LLC was $400 or more in the tax year, you must pay self-employment tax. Complete Schedule SE and attach it to your individual 1040.

Report employment taxes. If your LLC pays employees from whom it withholds federal taxes, the company must file a quarterly Form 941 unless its total withholding for the year is less than $1,000, in which case you can file Form 943 just once per year. The company must also provide the employees with a W-2 and file both a W-2 and W-3 with the Social Security Administration. A single-member LLC must pay these taxes from a bank account on which it is the primary named account holder, and must have a unique federal EIN.

Multi-member LLC

File Form 1065. Unless your multi-member LLC has elected to be taxed as a corporation, you must file a Form 1065 each year, which is designed to reflect distribution among partners. This form reflects the net profit or loss of the LLC, and the percentage of that gain or loss that will be attributed to each member.

Send Schedule K-1. Each member should receive a schedule K-1 (1065) reflecting their share of the totals on Form 1065. This form should be attached to each member's individual Form 1040 with the amount therein reflected in the individual return.

Pay self-employment tax. Members of a multi-member LLC are also considered self-employed and must pay individual self-employment tax on distributions they receive if totaling over $400. Compensation paid for services rendered to the LLC not as a member or partner are counted separately, but may also be subject to self-employment tax if more than $400 in a given year.

Report employment taxes. If your multi-member LLC pays employees and withholds federal taxes, the company must file a Form 941 each quarter. If the total amount withheld is less than $1,000 in a year, you can file Form 943 at the end of the year. The company must also provide the employees with a W-2 and file both a W-2 and W-3 with the Social Security Administration.

Warnings

  • If you've elected to be taxed as a corporation, you must follow the separate rules for filing required of a corporation.

Tips

  • In addition to the Forms described above, an LLC or member could also be liable for filing quarterly estimated tax returns, federal unemployment taxes and various excise taxes.

References

Resources

About the Author

Joseph Nicholson is an independent analyst whose publishing achievements include a cover feature for "Futures Magazine" and a recurring column in the monthly newsletter of a private mint. He received a Bachelor of Arts in English from the University of Florida and is currently attending law school in San Francisco.

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