![]() ![]() The single-member LLC tax returnĪ single-member LLC that is taxed like a sole proprietorship reports its income and expenses on Schedule C of the member’s personal income tax return. However, if you’d prefer to have your LLC taxed like a corporation, you can change its tax status by filing a form with the IRS. If your LLC has more than one member, the IRS automatically treats it like a general partnership. If your LLC has only one owner (known as a “member”), the IRS will automatically treat your LLC like a sole proprietorship. It just means that LLCs are taxed as though they were a different kind of entity. That doesn’t mean that limited liability company income isn’t taxed. Therefore, while there are forms and procedures for corporate tax returns, there is no such thing as an LLC tax return form. It’s important to understand the differences between them because the way your business is taxed can affect both your total tax bill and your obligation to pay self-employment tax.īecause LLCs are a relatively new type of business entity, the Internal Revenue Service has not established a tax classification for them. LLCs can choose to be taxed like sole proprietorships, partnerships or corporations. But if you’re just starting out, the LLC tax filing process can seem confusing. This tax flexibility is one of the things that make LLCs so appealing for small business owners. With no tax classification of their own, they inhabit the tax homes of other types of businesses, and they can choose and change the way they are taxed. From a tax standpoint, limited liability companies are like hermit crabs. ![]()
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