What tax forms do I need for my LLC ?

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The tax forms required for your LLC depend on how your LLC is classified. IRS Publication 3402 defines an LLC as :

“a business entity organized in the United States under state law. An LLC may be classified for federal income tax purposes as a partnership, corporation, or an entity disregarded as separate from its owner by applying the rules in Regulations section 301.7701¬≠3.”

So your LLC can be required to file tax forms as any of the possible business entities. Which forms you must file depends on how you set up your LLC.

Partnership

The default classification for an LLC with at least two members is Partnership for federal income tax purposes. So if you have at least one other owner in your LLC, you will have to file as a Partnership. The main tax form for partner ships is the 1065. Click here to go to a post that has tax information on partnerships.¬†There are rules for who can sign an LLC’s 1065 Partnership tax return. Only a member manager can sign the tax return and only a member manager can be the “Tax Matters Partner”. A member manager is any owner who has the authority to make management decisions necessary to conduct the LLC’s business.

Corporation or S Corporation

An LLC can elect to be taxed as a corporation or S corporation. To be taxed as a corporation you must file form 8832. To be taxed as an S corporation you must file form 2553. If you decide to be taxed as an S corporation, you do not need to file the 8832 corporation form first. Click here to see a post on what forms are required for a corporation. Click here to see a post on what forms are required for an S corporation.

Disregarded Entity

If your LLC only has one owner and you don’t file the forms to be taxed as a corporation or S corporation, it will be classified as a disregarded entity. This might sound like something bad but it just means that your LLC is not considered separate from you for tax purposes. Partnerships and corporations file separate tax returns form their owners and disregarded entities do not. So if your LLC has one owner and is not a corporation or S corporation, you are a Sole Proprietorship for tax purposes. A Sole Proprietorship uses Schedule C with their 1040. Click here to see a post on what tax forms are required for a Sole Proprietorship.

Changing Your LLC Classification

An LLC can change it’s classification. However you need to follow certain rules. If you change your classification, you can not change it again for 60 months (five years) after the change. If you make an election to be a corporation or S corporation when you start your LLC, the 60 month limitation doesn’t apply. So you can make a change before the five year period if you decide you want to be a partnership or sole proprietor. Making this change will have tax consequences so make sure research what the changes mean and talk to a CPA.



Nathan

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