Law & Legal & Attorney Tax Law

What Federal Tax Returns Are Required for LLC?

    Filing as a Corporation

    • A corporation pays taxes as a business entity independent of its owners. According to the IRS, to be treated as a corporation, an LLC has to file Form 8832, Entity Classification Election, and then elect to be taxed as a corporation. If the LLC elects to be taxed as a corporation, then it must file Form 1120, U.S. Corporation Income Tax Return. A multi-member LLC that does not elect to be classified as a corporation will, by default, be regarded as a partnership.

    Filing as a Partnership

    • By filing as a partnership, all profits and losses are taxed as each partner's personal income. According to the IRS, if an LLC decides to file as a partnership, the LLC must file Form 1065, U.S. Return of Partnership Income. As with any partnership, "each owner should show his pro-rata share of partnership income (reduced by any tax the partnership paid on the income), credits and deductions on Schedule K-1 (1065), Partner's Share of Income, Deductions, Credits, etc."

    Filing as a Sole Proprietorship

    • An LLC may file as a sole proprietorship only if it is a single-member LLC, or SMLLC. According to the IRS, an SMLLC can be taxed as either a corporation or a single member "disregarded entity." By default, an SMLLC that does not elect to be taxed as a corporation will be classified as a disregarded entity, which is taxed as a sole proprietor for income tax purposes. As a sole proprietor, you must then file Form 1040.

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