What Forms Does an LLC File for Taxes?

Limited Liability Companies (LLCs) offer business owners a flexible structure, particularly concerning how they are taxed. Unlike traditional corporations, an LLC itself is not a distinct tax classification but rather a legal entity. This unique characteristic means that the Internal Revenue Service (IRS) taxes LLCs based on the number of owners and whether any specific tax elections are made.

Understanding LLC Tax Classifications

An LLC operates with pass-through taxation by default, meaning the business’s income and losses are reported on the owners’ personal tax returns, and the LLC itself does not pay federal income tax. This structure avoids the “double taxation” often associated with C corporations, where profits are taxed at the corporate level and again when distributed to shareholders.

For a single-member LLC, the IRS treats it as a “disregarded entity,” which is akin to a sole proprietorship for federal income tax purposes. This means the LLC’s income and expenses are reported directly on the owner’s individual tax return. Conversely, a multi-member LLC is automatically classified and taxed as a partnership. In this scenario, the LLC files an informational return, and each member reports their share of the business’s income or loss on their personal tax return.

LLCs also have the option to elect different tax classifications by filing specific forms. An LLC can choose to be taxed as an S corporation, which can be advantageous for owners seeking to reduce self-employment taxes on distributions. To make this election, an LLC files Form 2553, Election by a Small Business Corporation.

Alternatively, an LLC can elect to be taxed as a C corporation. This election is made by filing Form 8832, Entity Classification Election.

Federal Income Tax Forms by Classification

The tax classification of an LLC determines the primary federal income tax forms it must file with the IRS.

For a single-member LLC, which is treated as a disregarded entity, the owner reports the business’s income and expenses on their personal income tax return, Form 1040, U.S. Individual Income Tax Return. This reporting typically occurs on Schedule C (Form 1040), Profit or Loss From Business.

A multi-member LLC, by default taxed as a partnership, is required to file Form 1065, U.S. Return of Partnership Income. This form details the partnership’s overall income, gains, losses, and deductions. The LLC then provides each partner with a Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., which reports their individual share of these items for their personal Form 1040.

If an LLC elects to be taxed as an S corporation, it files Form 1120-S, U.S. Income Tax Return for an S Corporation. This form reports the S corporation’s income, deductions, and credits. S corporations also issue a Schedule K-1 (Form 1120-S) to each shareholder, providing their pro rata share of the S corporation’s income, losses, deductions, and credits for their individual Form 1040.

When an LLC elects to be taxed as a C corporation, it files Form 1120, U.S. Corporation Income Tax Return. This form is used to report the corporation’s income, gains, losses, and deductions, and to calculate its income tax liability. A C corporation pays income tax at the corporate level, and its profits are subject to corporate tax rates.

Other Federal Tax Forms

Beyond the primary income tax returns, LLCs may need to file various other federal tax forms depending on their operations and whether they have employees or engage independent contractors.

If an LLC has employees, it becomes responsible for withholding and remitting federal income, Social Security, and Medicare taxes. Employers must file Form 941, Employer’s Quarterly Federal Tax Return, quarterly to report these withheld taxes and the employer’s share of Social Security and Medicare taxes. Additionally, employers file Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, to report federal unemployment taxes.

Employers must also provide employees with Form W-2, Wage and Tax Statement, annually, detailing their wages and taxes withheld. A summary of all W-2 forms is submitted to the Social Security Administration along with Form W-3, Transmittal of Wage and Tax Statements.

LLCs that pay non-employee compensation, such as to independent contractors, or make certain other types of payments, may need to file information returns. For payments of $600 or more to independent contractors, the LLC must file Form 1099-NEC, Nonemployee Compensation. If the LLC makes other miscellaneous payments of $600 or more, such as rents or royalties, it may need to file Form 1099-MISC, Miscellaneous Information.

State and Local Tax Forms

While federal tax obligations are uniform across the United States, LLCs must also navigate a diverse landscape of state and local tax requirements. These obligations vary significantly by jurisdiction.

Many states impose their own income taxes, which may require LLCs to file separate state income tax returns depending on their federal tax classification and state-specific regulations. If an LLC sells goods or taxable services, it will likely be responsible for collecting and remitting sales tax, requiring regular sales tax filings with the state’s revenue department.

Beyond income and sales taxes, LLCs may be subject to other state and local levies. Many states impose an annual registration fee or a franchise tax, which requires filing an annual report or specific tax form. Local jurisdictions may also require business licenses, permits, or local income taxes.

Consulting with the state’s department of revenue or a qualified tax professional is advisable to ensure full compliance with state and local filing obligations.