Tax season is here, and you’re probably busy getting your documents in order to pay Uncle Sam. While there are no special tax rules for an LLC, you do have the option to file taxes as a sole proprietorship, partnership or Corporation. To help you prepare to file your 2017 taxes by the deadline, here are the tax forms you may need:
Filing Taxes as a Sole Proprietorship
If you’re filing 2017 taxes under the IRS’s sole proprietor rules, you’ll be personally responsible for all taxes, and your business profits will pass through to your personal tax return. In other words, as far as the IRS is concerned, there’s no legal difference between you and your business, explains Katherine Pomerantz, owner of The Bookkeeping Artist. You would file taxes exactly as if you were a sole proprietor.
For filing as a company of one, you’ll need to gather the following tax forms from your clients and employers:
Form 1099-MISC: Collect this form from any clients who have paid you at least $600 in the past year. If you hired help for your business, such as contractors and freelancers, and paid them at least $600 in the past year, you’ll need to file a 1099 to each person you’ve paid.
Form W-2: These are from employers who withhold taxes from your income. The W-2 form reports an employee’s annual wages and the amount of taxes withheld from your paycheck.
Other forms you’ll need to file as a sole proprietorship include:
- Form 1040: U.S. Individual Income Tax Return
- Form 1040 Schedule C: Profit or Loss from Business (Sole Proprietorship)
You may also need to file the following tax forms:
- Form 1040 Schedule E: Supplemental Income and Loss. This form reports supplemental income and loss from assets such as rental real estate, royalties, partnerships, S Corporations, estates and trusts.
- Form 1040 Schedule F: Profit or Loss from Farming
Filing Taxes as a Partnership
To classify your business as a partnership, you’ll need to file Form 8832. If you’re filling your LLC as a partnership, each owner of your business is responsible for reporting their own income, deductions and credits. And even though no owner in the partnership is responsible for all the business earnings, you’ll need to file a Form 1065 Schedule K-1.
Your LLC will report each owner’s share on the Schedule K-1. For instance, if your company earned $200,000 last year and deducted $80,000 in business expenses, you and your partner will both get a Schedule K-1 form with $100,000 in earnings and $40,000 in deductions.
Filing Taxes as a C Corp
Filing Taxes as an S Corp
Another important thing to note: LLCs are business entities formed by state statute, not federal law, explains Pomerantz. “State governments are therefore responsible for governing the LLCs within their jurisdiction, and your tax entity and business entity are two distinct things when you become an LLC,” says Pomerantz.
Make sure you check your Secretary of State or Secretary of Commerce’s website for any state filing requirements you must follow, explains Pomerantz. “Remember, just because your LLC is registered in one state does not mean you won’t have to file in other states as well,” says Pomerantz. “If you have offices or employees around the country, double check that you don’t owe tax in those states as well.”
The deadline to files taxes for 2017 is Tuesday, April 17, 2018. But you can file as early as Monday, January 29, 2018, so don’t delay. If you have any questions or would like help filing your business taxes, we’re here for you. You can speak to a representative at Incfile’s business taxes service for professional assistance.