What Tax Forms Are Required for an LLC to File?

A Limited Liability Company (LLC) is a popular and flexible business structure, offering personal liability protection for its owners. This structure provides significant adaptability, especially concerning how the entity is treated for tax purposes.

How LLCs are Taxed

LLCs possess unique flexibility in their federal income tax treatment, unlike corporations which have a predetermined tax structure. The Internal Revenue Service (IRS) does not recognize an LLC as a distinct tax classification. Instead, an LLC’s default tax classification depends on the number of its owners, referred to as members. A single-member LLC (SMLLC) is taxed by default as a disregarded entity, meaning its income and expenses are reported directly on the owner’s personal tax return, similar to a sole proprietorship. If an LLC has multiple members, the default classification for federal tax purposes is a partnership.

Beyond these default classifications, an LLC can elect to be taxed as either an S Corporation or a C Corporation. This election offers strategic tax planning opportunities, allowing owners to choose the tax structure that best suits their needs. To elect S Corporation status, an LLC must file Form 2553, “Election by a Small Business Corporation,” with the IRS. This election generally allows profits and losses to be passed through directly to the owners’ personal income without being subject to corporate income tax.

Alternatively, an LLC can choose to be taxed as a C Corporation by filing Form 8832, “Entity Classification Election.” Electing C Corporation status means the LLC will be subject to corporate income tax on its profits. Shareholders will then be taxed again on any distributed dividends, a concept known as double taxation. Both Form 2553 and Form 8832 require the LLC’s name, address, Employer Identification Number (EIN), and the effective date of the election.

Federal Tax Forms for Disregarded Entities and Partnerships

For single-member LLCs (SMLLCs) treated as disregarded entities, the business’s income and expenses are reported on the owner’s individual income tax return. Most SMLLCs utilize Schedule C (Form 1040), “Profit or Loss from Business,” to detail their business operations, including gross receipts, cost of goods sold, and various business expenses. This schedule calculates the net profit or loss from the business, which then flows directly to the owner’s personal Form 1040. Schedule C is appropriate for most self-employed individuals and single-member LLCs engaged in typical business activities.

Certain types of SMLLCs may report their income and expenses on different schedules. For instance, if the SMLLC’s primary activity involves rental real estate, income and expenses are reported on Schedule E (Form 1040), “Supplemental Income and Loss.” Similarly, SMLLCs involved in farming operations report their financial results on Schedule F (Form 1040), “Profit or Loss From Farming.”

Multi-member LLCs, taxed as partnerships, file Form 1065, “U.S. Return of Partnership Income.” A partnership itself does not pay federal income tax; instead, it reports its income, gains, losses, deductions, and credits. Form 1065 includes Schedule K-1 (Form 1065), “Partner’s Share of Income, Deductions, Credits, etc.” The partnership prepares a Schedule K-1 for each member, detailing their individual share of the LLC’s financial results. Each member then uses this information to report their portion of the LLC’s income or loss on their personal income tax return, Form 1040.

Federal Tax Forms for Corporate Elections

For LLCs electing S Corporation status, the business 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, similar to a traditional corporation. S Corporations maintain their pass-through nature, meaning income or loss is generally not taxed at the corporate level. Instead, these items are passed through to the shareholders.

Each shareholder receives a Schedule K-1 (Form 1120-S), “Shareholder’s Share of Income, Deductions, Credits, etc.,” which reports their proportionate share of the S Corporation’s income, deductions, and credits. Shareholders then include this information on their personal income tax returns, Form 1040.

If an LLC elects to be taxed as a C Corporation, it files Form 1120, “U.S. Corporation Income Tax Return.” This form reports the corporation’s income, gains, losses, deductions, and credits, and calculates its federal income tax liability. Unlike S Corporations or partnerships, a C Corporation is a separate taxable entity. This means the corporation pays income tax on its profits at the corporate tax rate. Form 1120 requires detailed financial information, including gross receipts, cost of goods sold, operating expenses, and a balance sheet.

Other Federal Tax Filings

Beyond income tax forms, LLCs may have additional federal filing obligations depending on their operational activities. If an LLC hires employees, it is responsible for employment taxes. Employers generally file Form 941, “Employer’s QUARTERLY Federal Tax Return,” to report federal income tax, Social Security tax, and Medicare tax withheld from employee wages, along with the employer’s share of Social Security and Medicare taxes. This form is filed quarterly.

LLCs with employees must also file Form 940, “Employer’s Annual Federal Unemployment (FUTA) Tax Return.” This annual form reports the Federal Unemployment Tax Act (FUTA) tax, which helps fund state unemployment compensation programs. Employers are solely responsible for paying FUTA tax, and it cannot be withheld from employee wages. At year-end, employers issue Form W-2, “Wage and Tax Statement,” to each employee, summarizing their annual wages and taxes withheld. A Form W-3, “Transmittal of Wage and Tax Statements,” is then submitted to the Social Security Administration, summarizing the data from all W-2 forms.

LLCs that make payments of $600 or more to independent contractors during the year are required to report these payments to the IRS using Form 1099-NEC, “Nonemployee Compensation.” The LLC must provide a copy of Form 1099-NEC to each contractor and file a copy with the IRS.

Certain industries or business activities may trigger excise tax obligations. Excise taxes are imposed on the sale of particular goods or services, such as fuel, environmental taxes, or certain luxury items. If an LLC engages in activities subject to these taxes, it may need to file Form 720, “Quarterly Federal Excise Tax Return.” This form is filed quarterly, reporting and remitting the excise taxes collected or incurred.

State and Local Tax Filings

Beyond federal obligations, LLCs must also navigate a complex landscape of state and local tax requirements, which vary considerably by jurisdiction. Almost every state imposes some form of income tax, and how an LLC is taxed at the state level often aligns with its federal income tax classification. For example, if an LLC is treated as a disregarded entity or partnership for federal purposes, many states follow this pass-through treatment, requiring owners to report their share of income on their individual state tax returns. Conversely, if the LLC elects corporate status federally, it will likely file state corporate income tax returns. Some states also have specific pass-through entity taxes or informational filing requirements for LLCs.

Sales tax is a common state-level obligation for LLCs that sell goods or certain services. If an LLC engages in taxable sales, it is required to collect sales tax from customers and remit it to the state revenue department. This typically involves registering with the state’s tax authority, obtaining a sales tax permit, and filing periodic sales tax returns, often monthly or quarterly, depending on the volume of sales.

Many states and some localities impose annual fees or franchise taxes on LLCs for the privilege of conducting business within their borders. These fees or taxes can range from a nominal annual registration fee to a tax based on the LLC’s revenue, net worth, or income, regardless of whether the LLC generates a profit.

LLCs that own real estate or tangible business personal property, such as equipment, furniture, and inventory, may be subject to property taxes. Real property taxes are assessed on land and buildings, while business personal property taxes are levied on movable assets used in the business. These taxes are typically assessed and collected at the local level by counties, cities, or other taxing districts. Local jurisdictions may also require business licenses, permits, or specific city or county taxes.