The owners or members of the LLC are responsible for filing LLC tax returns and paying any state or local LLC taxes. Additional responsibilities for LLC taxes include withholding tax on the income allocated to its members, collecting sales tax, paying payroll taxes on employees, and filing Form 1099 information returns.
Some other responsibilities for LLC taxes you should consider are:
· Pay State LLC Fees: Some states charge an annual LLC fee, also known as a franchise tax, registration fee, or renewal fee. Be sure to do your research on what fees an LLC is required to pay in your state.
· File State LLC Tax Returns: In most states, LLCs also have to file a tax return, and may have to pay state taxes. If you live in one of the seven states that does not have a state income tax (Alaska, Florida, Nevada, S. Dakota, Texas, Washington, and Wyoming), then lucky you! For those not so fortunate, you will report and pay taxes for your LLC to your state just like you do federal taxes.
· Collect Sales Tax: If you sell products or services that are taxable, then you must collect sales tax from your customers and report and pay that tax to the state authorities. To learn more, check our sales and use tax guide.
· Payroll Tax: The LLC will need to withhold payroll taxes from employees and file payroll tax returns with federal and state agencies. At the end of the year, the LLC will need to issue a Form W-2 to each employee.
· Withholding on Non-Resident Members: An LLC may need to withhold federal income tax on LLC income allocated to members who are non-resident aliens. Additionally, an LLC may need to withhold state income tax on LLC income allocated to members who live outside the state where the LLC conducts business.
· File Form 1099-MISC: An LLC may need to prepare and to file Form 1099-MISC if it has paid money to independent contractors, to attorneys, to health care professionals, and for rent.
· Register in States Where Conducting Business: The LLC may need to register in states where the LLC is conducting business. Each state has its own rules for what counts as conducting business in a state.
· City Business License or Registration: The LLC may need to obtain business registrations or business licenses in the cities where the LLC conducts business operations.
· Pay Estimated Tax: The members of the LLC may need to make estimated tax payments (both federal and state) so that any tax related to their LLC income is paid throughout the year.
· Personal Tax Returns: The members of the LLC will need to file their own personal tax returns (Form 1040) reporting their share of the income from the LLC.