Individual Income Tax Return.īecause the IRS ignores LLC status for taxes purposes, the company files like a sole proprietorship. The member then lists the net profit or loss on the income section of Form 1040, U.S. LLCs report their business income and expenses on Schedule C of the member's personal income tax return. Single-member LLC taxes work like those of a sole proprietorship. Here's how LLCs file federal income taxes under each tax classification: Single-member LLCs But as your business grows, you should consult a tax adviser or accountant to see if your LLC might benefit from taxation as a corporation. If you're starting out, you'll probably prefer to file as a sole proprietorship or partnership.

Knowing how to file business taxes for an LLC is an important step in keeping your finances on track. It can also re-form as a partnership or proprietorship if the LLC adds or loses members. But if you'd prefer to have your LLC taxed like a corporation, you can change its tax status by filing a form with the IRS.

General partnership i f an LLC has more than one member.Īny LLCs file taxes under their default designation.Sole proprietorship i f an LLC only has one owner.The IRS assigns two default tax designations: From there, members can elect to change their tax classification. The IRS assigns a default tax structure based on the number of members. We'll highlight different tax classifications, their requirements, and best practices to find the best tax strategy for your business.Īn LLC's tax classification depends on its members, the business owners. LLCs can file like sole proprietorships, partnerships, or corporations, and it's essential to understand their differences and how they affect how your business pays taxes. But if you're starting out, the LLC tax filing process can seem confusing. This flexibility is one of the qualities that make LLCs appealing to small business owners. Owners of a limited liability company (LLC) can choose and change how they file taxes.

Sample partnership tax return