What Tax Form Do I Use for an LLC?

A Limited Liability Company (LLC) offers a flexible business structure that provides owners with personal liability protection, shielding personal assets from business debts and lawsuits. Unlike traditional corporations, an LLC is not inherently a distinct tax entity under federal law. Instead, its income and expenses are typically “passed through” to the owners. The specific tax forms an LLC uses depend on its tax classification, which varies based on the number of owners and any elections made with the IRS.

Understanding Default LLC Taxation

The IRS assigns a default tax classification to an LLC based on its number of members (owners) if no specific election is made. This default status dictates how the LLC’s income and expenses are reported for federal income tax purposes. As a pass-through entity, the business itself typically does not pay federal income tax.

Single-Member LLCs (SMLLCs)

By default, a single-member LLC is treated as a “disregarded entity” by the IRS. This means the LLC’s financial activities are reported directly on the owner’s personal income tax return. The owner reports the LLC’s income and expenses on Schedule C (Form 1040), Profit or Loss From Business. The net profit or loss calculated on Schedule C then flows to the owner’s individual Form 1040.

Multi-Member LLCs (MMLLCs)

An LLC with two or more members is, by default, taxed as a partnership. As a pass-through entity, the business itself generally does not pay income tax. Instead, the LLC files an informational return with the IRS, Form 1065, U.S. Return of Partnership Income. The LLC then issues a Schedule K-1 (Form 1065) to each member, detailing their share of the partnership’s income, deductions, and credits. Each member uses this information to report their allocated share of profit or loss on their personal Form 1040.

Considering Alternative LLC Tax Status

An LLC has the flexibility to elect a different tax classification than its default status. These elections are made by filing specific forms with the IRS.

Electing S Corporation Status

An LLC may choose to be taxed as an S corporation to potentially reduce self-employment taxes on distributions beyond a reasonable salary. To qualify, a business must meet specific eligibility requirements, such as being a domestic entity with no more than 100 shareholders and only one class of stock. The election is made by filing Form 2553, Election by a Small Business Corporation, with the IRS. This form requires basic information about the LLC and its shareholders. Generally, Form 2553 should be filed within two months and 15 days of the beginning of the tax year for which the election is to be effective, or from the LLC’s formation date for new entities.

Electing C Corporation Status

An LLC might elect to be taxed as a C corporation for reasons such as easier capital raising, the ability to retain earnings within the business, or access to certain corporate deductions. A C corporation is a separate legal entity for tax purposes, paying its own corporate income tax. This election is made by filing Form 8832, Entity Classification Election, with the IRS. This form requires basic information about the LLC and the effective date of the election, which generally cannot be more than 75 days before the form is filed or more than 12 months after the filing date. Once this election is made, the LLC is typically restricted from changing its classification again for 60 months, or five years.

Annual Tax Reporting Forms for LLCs

Once an LLC’s tax status is established, specific annual income tax forms must be filed with the IRS to report the business’s financial performance.

For Disregarded Entities (SMLLCs)

A single-member LLC, taxed as a disregarded entity, reports its business activities on Schedule C (Form 1040). This form details the business’s gross income and deductible expenses, such as advertising, office expenses, and supplies. The net profit or loss from Schedule C is then transferred to the owner’s personal Form 1040. Owners of SMLLCs are also generally responsible for self-employment taxes, which cover Social Security and Medicare contributions. These taxes are calculated on Schedule SE (Form 1040), Self-Employment Tax.

For Partnerships (MMLLCs)

Multi-member LLCs, taxed as partnerships, file Form 1065 annually. This informational return provides an overview of the partnership’s financial performance, including gross income, ordinary business income, and various deductions. After completing Form 1065, the LLC issues a Schedule K-1 (Form 1065) to each partner. Each Schedule K-1 reports the individual partner’s distributive share of the partnership’s income, losses, deductions, and credits. Partners then use this information to report their share of the partnership’s income or loss on their personal Form 1040.

For S Corporations

An LLC that has elected S corporation status files Form 1120-S, U.S. Income Tax Return for an S Corporation. This form reports the S corporation’s income, deductions, gains, and losses. As a pass-through entity, it issues a Schedule K-1 (Form 1120-S) to each shareholder, detailing their proportional share of the corporation’s income, deductions, and credits. Shareholders then report these amounts on their personal Form 1040. Officer-shareholders of an S corporation must pay themselves a “reasonable salary” as determined by the IRS to avoid issues with the IRS regarding distributions.

For C Corporations

If an LLC elects to be taxed as a C corporation, it files Form 1120, U.S. Corporation Income Tax Return. A C corporation is a separate taxable entity responsible for paying its own corporate income tax. Form 1120 requires the corporation to report its gross income, including sales, dividends, and interest, and various deductions to arrive at taxable income. A significant aspect of C corporation taxation is “double taxation,” where profits are taxed at the corporate level and again when distributed to shareholders as dividends.

Federal tax forms can be filed electronically through IRS-authorized e-file providers or mailed directly to the IRS. The general filing deadline for calendar year partnerships and S corporations is March 15, while for C corporations and sole proprietorships (including single-member LLCs), the deadline is generally April 15. If a due date falls on a weekend or holiday, it is extended to the next business day. An automatic six-month extension for filing can be requested using Form 7004 for partnerships, S corporations, and C corporations, or Form 4868 for sole proprietors and single-member LLCs. While an extension grants more time to file, it does not extend the deadline for paying any taxes owed, which must still be paid by the original due date to avoid penalties and interest.