There are four different ways to file tax returns for an LLC. LLCs treated as a Sole Proprietorship file a Schedule C on the owner’s personal tax return. LLCs treated as a partnership file a partnership tax return. LLCs that choose corporate tax treatment file either an S-corporation tax return or a C-corporation tax return.
How to file taxes for LLCs and the LLC tax returns required for the four LLC types are:
Owners of a single-member Limited Liability Company (LLC) taxed as a sole proprietorship report the income, deductions, and credits for the LLC on their personal tax returns (Form 1040). The LLC owner will report the LLC’s income and deductions on Schedule C, and the net earnings of the LLC will also be reported on Schedule SE.
The two forms filed with the owner’s personal 1040 tax return for single-member LLC taxes are:
Schedule C is the tax form used by sole proprietorships to report
all income and expenses for a business. For step-by-step instructions for
Schedule C, check out our guide on how to complete Schedule C.
Schedule SE must be filed by a single-member LLC that chooses to be treated like a sole proprietor for tax purposes. This schedule is for calculating the Social Security tax and Medicare tax on self-employment income. Self-employment tax is required when net earnings from self-employment are at least $400 or more for the year. Net earnings from self-employment include income from an LLC as well as income from other sole proprietorships or partnerships.
A multi-member Limited Liability Company (LLC) reports its income, deductions, and credits for the LLC on a partnership tax return. With LLC partnership taxes, net income is allocated to each of the members. The partnership is required to file LLC tax return Form 1065 along with Schedule K-1. Each of the LLC members report their share of the LLC’s net income from Schedule K-1 on Schedule E of their personal Form 1040 tax return.
The four forms required for LLC partnership taxes are:
Partnerships are required to report all income, deductions, and
credits of the partnership on Form 1065. This form is filed for informational
purposes only, which means that there is no tax due. For more information on
partnership tax returns, check out our guide on how to complete Form 1065.
Since partnerships do not pay taxes as an entity, the income and
expenses generated by the partnership must be paid by each partner. Each
partner’s share of the partnership’s income and expenses is reported on
Schedule K-1.
Each partner must report information from the Schedule K-1 on
his/her personal tax return using Schedule E. The net business income of the LLC is reported on Part II of
Schedule E.
Each member of a multi-member LLC that is taxed as a partnership is subject to self-employment tax on their net business income. To calculate self-employment tax, complete Schedule SE and file it with your personal tax return. Self-employment tax applies when a person’s net earnings from self-employment reaches at least $400 for the year. Net earnings from self-employment includes income from LLCs, from partnerships, and from sole proprietorships. To learn more, read our guide to self-employment taxes.
An LLC that elects to be treated like an S-corporation is required to file Form 1120S, the S-corporation tax return. LLC members report and pay tax on their share of the LLC’s earnings on their personal tax returns, either as wages taxed through Form W-2 or as a share of the LLC’s net earnings reported on Part II of Schedule E.
The three forms required for S-corporation LLC taxes are:
Form 1120S is used to report all business earnings for an
S-corporation. An S-corp usually does not pay its own taxes. Instead, all
income and expenses generated by the business are allocated to and paid by each
owner of the LLC. For more information on S-corp tax returns, check out our
guide on how
to complete Form 1120S.
Since S-corps do not pay LLC taxes as an entity, the income and
expenses generated by the S-corp must be paid by each shareholder. Each
shareholder’s share of income and expenses is provided on Schedule K-1 (Form 1120S).
Each member must report information from the Schedule K-1 on
his/her personal tax return using Schedule E. The net business income of the LLC is reported on Part II of
Schedule E.
An LLC that elects to be treated like a C-corporation for tax purposes reports its income and pays its own income tax on Form 1120, the C-corp tax return. The LLC will pay its own taxes, at the corporate tax rates, on its net earnings. The members pay tax on their personal Form 1040 only on salary or dividends actually received from the LLC.
The two LLC tax return forms required for LLCs treated as C-corporations are:
Form 1120 is used to report all business earnings for a C-corporation.
Since a C-corporation is viewed as a taxable entity by the IRS, the LLC pays
its own income tax at corporate tax rates.
The LLC may need to prepare and to file Form 1099-DIV. This form is used when the
LLC taxed as a C-corporation pays out dividends to the members. The members
will then include this dividend income and pay tax on their personal 1040 tax
returns. For more details on information returns, check out our guide to Form 1099 reporting.