IRS LLC Forms: Everything You Need to Know
IRS LLC forms will vary based on business requirements. Limited Liability Companies will file a different form depending on how it has elected to be taxed.4 min read
- Single-member LLCs will file IRS Form 1040.
- Multiple-member LLCs will file IRS Form 1065, which is for partnerships.
- S corporations will file IRS Form 1120S.
- C corporations will file Form 1120.
If you opt to be taxed as a corporation, you will need to file IRS Form 8832. LLCs who choose to be taxed as a partnership don't need to file this form.
LLC Filing Rules
There are no set IRS rules for LLCs. In fact, the IRS automatically treats an LLC as a partnership for tax purposes, unless you elect a different status. However, single owners in LLCs are required to pay taxes as if they were a sole proprietorship. Once you've elected your business' tax status, you cannot change it for five years.
How to Follow LLC Taxes
LLCs follow local state laws, but the IRS still requires these businesses to choose their tax status.
If you've elected to have your business treated as a sole proprietorship, you will file Schedule C in addition to your IRS Form 1040. You will pay federal taxes on both income and losses through Schedule C. Some specialty businesses are required to use Schedules E, F, or J. Some of these include farming and fishing. To learn more about single-member LLC responsibilities, review the IRS's guidelines for single-member LLCs.
Partnerships will file Form 1065 and must be sure to provide all members with a Schedule K-1 so they can report income and losses on their personal tax returns. A partnership is treated as a pass-through entity, so the partnership itself doesn't pay income tax. Business income and losses are passed along to the LLC's members. Owners pay tax based on their share at the personal income rate. Schedule K-1s are like a W-2 for partnerships.
If you opted for corporation tax status, you will complete either the Form 1120 for C corporations or Form 1120S for S corporations. S corporations are also a pass-through entity, however, there are strict requirements in order to structure your business this way. Like a partnership, S corporations will need to issue a Schedule K-1 instead of the business paying taxes itself.
For LLCs that are filing as a partnership or sole proprietorship, owners need to pay self-employment tax on the Schedule SE. Any LLC with employees will also need to file Form 940, which is the Employer's Annual Federal Unemployment (FUTA) Tax Return and Form 941, which is the Employer's Quarterly Federal Tax Return, or Form 944, the Employer's Annual Federal Tax Return.
You will also need to contact your state tax regulatory office to verify what state forms your LLC is required to file. Some states don't look at business income taxes. Others do not treat LLC federal tax elections in the same way, especially the S corporation. This is why you need to talk to your local state tax authority to verify your LLC is in full compliance. Lastly, verify with your state's department of employment to file the appropriate forms and any potential sales taxes owed.
Things to Keep in Mind with LLC Taxes
Form 1065 assists the IRS in determining that all members have reported income and losses correctly. If you're splitting LLC profits in a way that is different than member percentage of ownership amounts, you'll need to get a "special allocation" from the IRS. It's wise to consult with a tax attorney or accountant who can advise you on this.
Any multi-member LLC that has members who are not actively involved in the business may not have to pay self-employment taxes. These are individuals who invested but do not participate in any management decisions or operation activities.
Ensure you have covered any sales taxes owed, if applicable. Purchasers pay it and small business owners collect it and then turn it over to the respective authorities. The laws vary from state to state, which can be confusing, especially for those businesses who sell in multiple states.
Depending on the state, you may owe state taxes on your LLC. These are typically filed through your individual returns. Some states assess LLC income tax on top of whatever the members pay. Other states may require LLCs to pay a renewal fee, registration fee, or franchise tax. This is unrelated to any income.
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