How to Fill Out Form 1065 for an LLC

Form 1065, U.S. Return of Partnership Income, is an information return used by business partnerships to report their financial results to the Internal Revenue Service (IRS). For a Limited Liability Company (LLC), this form is used when the business has multiple members and is treated as a partnership for federal tax purposes. Form 1065 does not determine a tax liability for the business itself; instead, it documents the income, deductions, gains, and losses of the partnership.

This information is then “passed through” to the individual partners or members of the LLC. Each member receives a separate schedule, Schedule K-1, detailing their specific share of the partnership’s financial activity for the year. They use this information to report the business’s profit or loss on their personal tax returns and pay the corresponding taxes.

Determining Your LLC’s Filing Requirement for Form 1065

The requirement to file Form 1065 is tied to an LLC’s tax classification. For a domestic LLC with two or more members, the default classification is a partnership. Unless the LLC elects to be treated as a different entity, it must file Form 1065 annually, even if the business had no income or expenses.

In contrast, a single-member LLC is considered a “disregarded entity” by the IRS. Its financial activities are reported directly on the owner’s personal tax return, using Schedule C of Form 1040.

An LLC can also change its tax classification by filing an election with the IRS. If a multi-member LLC elects to be taxed as an S Corporation, it files Form 1120-S instead of Form 1065. If it elects to be treated as a C Corporation, it files Form 1120.

Information and Documents Needed to Complete Form 1065

To complete Form 1065 accurately, you will need to gather specific business, financial, and partner information. This includes:

• The official legal name of the LLC, its Employer Identification Number (EIN), physical business address, the six-digit Principal Business Activity (PBA) code, and the date the business started.
• A complete set of financial statements for the tax year, including a detailed income statement and a balance sheet showing assets, liabilities, and equity for the beginning and end of the year.
• Information for each partner, including their legal name, address, Social Security Number (SSN) or EIN, and their ownership percentage for profit, loss, and capital.
• Records of any capital contributions each partner made to the LLC, any distributions they received, and the information needed to calculate each partner’s tax basis in the partnership.

Completing Key Sections of Form 1065

The main sections of Form 1065 document the partnership’s overall financial performance and structure.

Page 1: Income and Deductions

The first page calculates the partnership’s ordinary business income or loss. You will enter basic business details, report gross receipts or sales, and list various business deductions. Common deductions include salaries, guaranteed payments to partners, rent, taxes, and depreciation. The result on Line 22 represents the ordinary business income or loss for the year.

Schedule B: Other Information

Schedule B is a series of “yes” or “no” questions that provide the IRS with more context about the partnership. Questions inquire about the entity type, ownership structure, and whether any single partner owned 50% or more of the partnership. It also asks about foreign partners and the requirement to file Forms 1099.

Schedule K: Summary of Partner Items

Schedule K summarizes all income, deductions, and credits that will be passed through to the partners. It aggregates the totals for the entire partnership before they are allocated. The ordinary business income from Page 1 is carried to Line 1 of Schedule K, along with other items like rental income, dividends, and charitable contributions.

Preparing and Distributing Schedule K-1

After summarizing the partnership’s finances on Schedule K, you must allocate those amounts to each member using Schedule K-1. A separate Schedule K-1 must be prepared for every individual or entity that was a member of the LLC during the tax year. The form details each partner’s specific share of income, deductions, and other items based on the partnership agreement.

For example, if the partnership’s ordinary business income was $100,000 and a partner has a 25% share, their Schedule K-1 will report $25,000 of ordinary income. The form also reports the partner’s share of liabilities and their capital account analysis. You are required to provide each partner with a copy of their completed Schedule K-1, as they need it to file their personal income tax returns.

Filing Form 1065 and Associated Schedules

The deadline to file Form 1065 and provide Schedule K-1s to partners is the 15th day of the third month after the tax year ends, which is March 17, 2025, for the 2024 tax year. A six-month filing extension to September 15, 2025, can be requested with Form 7004, but this does not extend the time for partners to pay their taxes.

Partnerships with more than 100 partners must file electronically, though e-filing is an efficient option for any partnership. When filing, a complete copy of every Schedule K-1 distributed to partners must be attached to the Form 1065. Retain a complete copy of the filed return and all schedules for your business records.