An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form , Entity Classification Election PDF , to elect how it will be classified for federal tax purposes. An LLC may be eligible for late election relief in certain circumstances. More In File. Effective Date of Election An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form , Entity Classification Election PDF , to elect how it will be classified for federal tax purposes.
Corporations have different tax filing requirements than either disregarded entities or partnerships. All corporations are required to file a corporate tax return, even if they do not have any income. If an LLC has elected to be treated as a corporation for tax purposes, it must file a federal income tax return even if the LLC did not engage in any business during the year.
Even if your LLC has no business activity, it is important to understand your LLC tax filing status and whether it is obligated to file a federal income tax return. Filing required returns on time can help your LLC avoid fines and penalties. Contents 3 min read. Jane Haskins is a freelance writer who practiced law for 20 years. Jane has litigated a wide variety of business dispute… Read more.
Starting a Business. As a business owner, you have many options for paying yourself, but each comes with tax implications. The expenses you incur as you set up your LLC are tax-deductible, though you need to know important limits, exceptions, and rules to legally deduct these costs. To do it after the business is formed requires Form be filed with the IRS. For an LLC that retains a significant amount of its profits within the business, corporate taxation is a benefit. Taxes for the LLC are taxed based on the rate for corporations , and owners are not taxed on their personal income tax on profits retained by the company.
Return of Partnership Income. Generally, members of LLCs filing Partnership Returns pay self-employment tax on their share of partnership earnings. Corporation Income Tax Return. The is the C corporation income tax return, and there are no flow-through items to a or SR from a C corporation return.
Each owner reports their pro-rata share of corporate income, credits and deductions on Schedule K-1 Form S. For additional information on the kinds of tax returns to file, how to handle employment taxes and possible pitfalls, refer to Publication , Tax Issues for Limited Liability Companies.
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