do i have to file taxes for llc [Expert Advice]

Last updated : Sept 1, 2022

Can you have an LLC and not file taxes?

LLC Corporations It is mandatory for all corporations to file annual tax returns, even if the business was inactive or did not receive income. An LLC that chooses to be treated as a C corporation for tax purposes is required to file Form 1120 (U.S. Corporation Income Tax Return).

Does an LLC have to file with the IRS?

Generally, members of LLCs filing Partnership Returns pay self-employment tax on their share of partnership earnings. If the LLC is a corporation, normal corporate tax rules will apply to the LLC and it should file a Form 1120, U.S. Corporation Income Tax Return.

How do I avoid paying taxes on my LLC?

A general Corporation making a Subchapter “S” Election or an LLC with or without a Subchapter S Election pays no federal tax on its taxable income and no employment taxes on its distributions to stockholders.

Do LLC pay taxes IRS?

The good news is that your LLC doesn't pay taxes or file federal tax returns. Instead, you report the income you earn or the losses you incur from your LLC on your personal tax return (IRS Form 1040). If you earn a profit from your LLC, that money is added to any other income that you've earned.

How do taxes work for LLC?

For the purposes of federal income tax, LLCs are treated as pass-through entities, which means that LLCs themselves do not pay taxes on their business income. It is rather its members who pay the taxes on their share of LLC's profits.

Do you have to file taxes your first year in business?

In the initial year(s) of business, U.S. partnerships do not need to file a federal return if the business hasn't received income or incurred any expenses treated as deductions or credits for federal income tax purposes.

What are the 2 main advantages of having an LLC?

• Limited liability. Members aren't personally liable for actions of the company.
• Management flexibility.
• Easy startup and upkeep.
• Limited liability has limits.
• Self-employment tax.
• Consequences of member turnover.

What can you write off on taxes for LLC?

• Meals and lodging.
• Deduction limit on meals.
• Food and beverage expense incurred together with entertainment expenses.
• Transportation (commuting) benefits.
• Employee benefit programs.
• Life insurance coverage.
• Welfare benefit funds.

How does an LLC avoid self-employment tax?

LLC owners choose to lessen their individual self-employment tax burden by electing to have the LLC treated as a corporation for tax purposes. Classification as an S Corporation (under Subchapter S of the Internal Revenue Code) is what most LLCs select when aiming to minimize their owners' self-employment taxes.

Is it better to be self employed or LLC?

You can't avoid self-employment taxes entirely, but forming a corporation or an LLC could save you thousands of dollars every year. If you form an LLC, people can only sue you for its assets, while your personal assets stay protected. You can have your LLC taxed as an S Corporation to avoid self-employment taxes.

Is it better to be 1099 or LLC?

The biggest difference between an LLC and an independent contractor is the fact that LLCs are required to register with the state and form business documents like articles of organization. LLCs also offer liability protection that independent contractors would not have otherwise.

What are the benefits of having an LLC?

A Limited liability company (LLC) is a business structure that offers limited liability protection and pass-through taxation. As with corporations, the LLC legally exists as a separate entity from its owners. Therefore, owners cannot typically be held personally responsible for the business debts and liabilities.

Should I get an EIN for my LLC?

An LLC will need an EIN if it has any employees or if it will be required to file any of the excise tax forms listed below. Most new single-member LLCs classified as disregarded entities will need to obtain an EIN. An LLC applies for an EIN by filing Form SS-4, Application for Employer Identification Number.

What is the benefit of a single-member LLC?

There are many benefits to forming an LLC versus operating as a sole proprietorship. A single-member LLC is generally shielded from personal liability for debts associated with the business. Note: Single-member LLCs must be careful to avoid commingling business and personal assets.

How much business expenses can you write off?

In 2021, you can deduct up to $5,000 in business start-up expenses and another $5,000 in organizational expenses in the year you begin business. Additional expenses must be amortized over 15 years.

Is LLC income considered earned income?

LLC (taxed as a C corporation) or a shareholder in a C corporation: The profits of the business aren't considered earned income, but rather are considered a return on investment and are taxed at special corporate income tax rates.

Do LLCs have to pay quarterly taxes?

Key takeaway: All LLC members must make quarterly tax payments. They must also pay the self-employment tax.

How much money do you have to make to file taxes for a business?

Generally, you must pay SE tax and file Schedule SE (Form 1040 or 1040-SR) if either of the following applies. If your net earnings from self-employment were $400 or more.

How do I file taxes as a first time business owner?

If you're a sole proprietor, every year you must file Schedule C (Profit or Loss From Business) with your Form 1040 (U.S. Individual Income Tax Return) to report your business's net profit and loss. You also must file Schedule SE (Self-Employment Tax) with your 1040.

Do business owners get tax refunds?

If you own a pass-through business and your estimated tax payments and tax withholding exceed the tax due on your return, you can receive a tax refund. Only C corporations pay income taxes directly, so C corporations are the only businesses that can get a refund.

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I hae their party people Jim Hart back at you here today again from Hawthorne law with another amazing crazy video today and today I want to answer another user question today's question is can you do a video on how to file federal taxes as sync as a single member LLC so make sure you stay tuned to the end of the video today because I have a special surprise and store for you something I'm doing that I have not done for a while so if you've been listening to this in October of 2018 I'm going to talk about the special surprise here at the end is a really important question it's it's a simple question but it's a hard question at the same time if you're a single member LLC the way you're gonna file your taxes is you're going to include all your business income and losses on your Schedule C which gets attached to your 1040 so it's actually fairly straightforward and easy the hard part about this is you need to make sure that during the course of the year you're keeping track of all your business income and expenses so that you can include that information on your Schedule C so you're going to know how much money you made you're going to need to know how much you paid in business expenses and these expenses could be anything from rent so this office I'm in right here I've paid rent for this office that's a business expense it could be for software you purchased for the business it could be for you know the computer you purchased for the business I know most people use their computers for business and personal you're gonna need to talk to an accountant about how to figure out how much you can devote for personal and how much you can deduct for business but that would be a business expense if you went out and met with people potential clients and referral sources and people like that those are all expenses that you're going to be able to deduct as part of your business income so this is so right now as we're nearing October 15th for 2018 if you filed an extension you're going to be doing your taxes for 2017 next year the tax law and the whole system is going to change and so there's actually some significant benefits to forming an LLC and/or you don't even need to form an LLC you can be a sole proprietor technical technically so there's a lot of benefits to being taxed as a business and one of which is you can deduct I believe it's 20 percent of your profit from your business from on your personal tax return that's a huge benefit if you think about it so if you netted $100,000 from your business income and that would ordinarily be taxed it I think it's around 15% I know you I know you accountants out there gonna watch this video and you're gonna correct me and tell me I'm a lawyer that shouldn't be doing tax stuff and and maybe you're right but I believe that's correct so now instead of paying $15,000 you're gonna pay 15% on $80,000 of income because you can deduct that 20 20 percent or $20,000 so that does a huge benefit to a lot of people so there you have it in terms of how do you file federal taxes as a single member LLC it's really just as easy as is filling out that Schedule C and including it with your tax return you're gonna pay self-employment taxes on all that money that you earn from the business but you still get to deduct quite a bit so that you can save yourself a lot so this is different than if you're an employee when you're an employee you basically have to declare all your wages you don't get to deduct any expenses off your wages as a business owner you get to net out the expenses from the revenue of the business and you only get taxed on the profit that your business earns so that's a that's a huge benefit that's why a lot of people like to become self-employed and like to own your own businesses or even become an independent contractor because you can actually pay a lot less in taxes by doing it that way so there you have it that's how you file your taxes as a single member LLC if you have any questions please feel free to leave a comment down below also if you like this video please click the little thumbs up button give me a like we love the likes around here and also don't forget to subscribe so you can get access to all my videos when they come out I was a little irregular for a while but we're starting to get back into the swing of things and I'm posting 1 to 2 videos a week now so make sure you click the little bell and you can get notified when videos hit the channel right away okay also special surprise I'm saying it I'm putting it out there which means I have to do it and this is something that I think it's gonna be a big benefit to a lot of you I've decided to do a special online training and basically the training is going to talk about all the things that you need to know all the roadblocks all the potential hurdles everything you need to know when you're starting your business from a legal standpoint the things that you need to be aware of so it's a big overview not teaching people business law you don't need to know business law but you do need to know the things that you should and shouldn't be doing as you're starting your business and that's what I'm gonna teach you on that free training that free train is coming up I haven't picked a date yet but if you go to the link in the description or there should be a link somewhere up here in the video it'll tell you exactly when that's going to be you can sign up for it and you love to see you on that free training so that's it for today folks have a great day and we will talk next time take care

Thanks for your comment Maryland Lebon, have a nice day.
- Rafael Chua, Staff Member

okay how to file your taxes as an llc owner let's discuss it now in order to do this we have to break this video down into two sections because you have the single member llc and then you have the multi-member llc and although they are both limited liability companies or llcs the tax returns are prepared and filed a little bit differently and i want to make sure that you are filing your taxes correctly in 2022 so today i'll be going over what tax returns you need to file as an llc owner what you need to record and what you need to put in your tax return how to pay your current and future taxes and any tips and faqs along the way so you stay out of trouble with the irs so if all that sounds good to you make sure you like this video while the intro plays hey there and welcome to our channel i'm sean with life accounting the accounting firm that is dedicated to helping you save on taxes and building more wealth and also i want to say thank you to everyone who has been subscribing and joining our channel we really appreciate the support and it gives us the positive reinforcement to continue making youtube videos alright so step number one what tax return do you need to file as an llc owner well as i mentioned it depends on what type of llc you have let's go over all three so you have a single member llc which means you are the sole owner of your limited liability company and you have no partners that means you will need to file your taxes using forms schedule c and schedule se and that can be found on the us 1040 the individual income tax return now the schedule c portion is used to report the income and expenses you incurred as a part of your business schedule se is also required to be included with your tax return as a single member llc because it is used to calculate your self-employment tax liability and schedule se stands for self-employment now i'll break down exactly what goes on as schedule c in just a second but before we do let's talk about the multi-member llc now if you have a multi-member llc that means you have at least one other partner in your business so there are at least two llc members if that's you then what you guys need to do is file u.s form 1065 the partnership return of income okay this form allows you to clearly allocate the portion of income and losses to each partner hey sean look i can split my profits with myself okay kind of like that now this form must be filed by the business tax deadline which is usually march 15th now there are about three pages on the 1065 forum which covers all your income and expenses as well now lastly if you have an llc regardless of if it is a single member llc or a multi-member llc and you have elected to be taxed as an s-corporation which by the way being taxed as an s-corporation allows you to eliminate some of the self-employment tax which is great for businesses who are making at least seventy thousand dollars in net income anyway llcs who have been elected to be taxed as an s corporation need to file us form 1120s the income return for s corporations and this form mainly ensures that owner employees are paying themselves a reasonable salary and calculate the distributions earned from the company this tax return also must be filed by the business tax deadline which is usually march 15th now llc partnerships in s corporations still need to file a normal 1040 form for their individual tax purposes as well alright so now that you know which tax forms you need to file let's move into number two what you need to record on your tax return now the tax code and the irs are very simple okay they want to know who you are and they want to know what integrity might i add how much money you made and what percentage of that should be allocated towards your taxes and that's the case for every business regardless of which tax return you need to file which by the way if you need professional assistance with tax planning and tax preparation then consider working with our team there will be a link in the description below where you can sign up for more information so the next step step number two for every llc owner is to record information about you and your business on your tax return you're gonna need to record stuff like your business name your business address your business ein number your principal business or profession like what you sell your principal business code or activity code your accounting method if you materially participated in the operations of the business if you just started or acquired the business and if you needed to file any 1099 forms as well as any other important information about your business the irs will ask you additional questions so they know everything there is to know after that then you can move into step number three and look at the next section on the schedule c general partnership form an 1120s tax form which is income reporting in this section the irs wants to figure out what your gross income was for your business now you may receive one or multiple 1099 miscellaneous forms or 1099 net forms to report exactly how much income you made and if you had a lot of online sales then you may also receive a 1099k form to report your income with as well hey sean look i'm reporting all my income forms okay kind of like that now once you have all your income reported then it's time to move on to step number three record your qualified business expenses now most platforms and companies make it pretty easy to find out what your gross income was for the year but expenses well not so much okay it's up to you to make sure you are tracking or bookkeeping all your expenses throughout the tax year now once you have all your expenses and transactions categorized and organized then you can move on to step number four and start recording your expenses on your tax return okay you're going to want to record any asset purchases that you made throughout the tax year any direct qualified expenses you spent money on such as advertising fees meals employee benefits etc and if you had cost of goods so you want to make sure you complete that section as well as well as any vehicle expenses you may have incurred as well now once you have listed all your qualified expenses or tax deductions or tax write-offs then you will arrive at your net income which will determine your total taxable income what tax bracket you fall into and what taxes you need to pay if you haven't already done so and all of that is calculated pretty quickly when you file on the 1040 form with a schedule c after that then you can move into step number five which is to go ahead and record any other individual activity on your tax return and then file your taxes however if you completed step number four within a 1065 partnership tax return or an 1120s tax return then step number five is for you to obtain your k1 document okay this k1 document is used to distribute each partnership share of current income deductions credits and other special items on their tax return so basically you need to file your 1065 or your 1120s again by the business tax deadline which is usually march 15 and then file your k1 document on your

Thanks nivelaraY your participation is very much appreciated
- Rafael Chua

About the author

Rafael Chua

I've studied geography at Stevens Institute of Technology in Hoboken and I am an expert in soil chemistry. I usually feel crappy. My previous job was hosts and hostesses I held this position for 6 years, I love talking about radio-controlled model playing and badminton. Huge fan of The Kardashians I practice bobsleigh and collect vintage cars.