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Wednesday, April 13, 2011

Tax forms required for limited liability corporations

LLC tax forms
IRS Form 1040 is used for LLCs with a single owner
Tax forms required for a Limited Liability Corporations (LLC) depend on the location of the business, the number of owners, for profit or not-for profit status and the number of employees if any.

In the United States the tax documentation required for a LLC is determined by the U.S. Internal Revenue Service (IRS). Various sections of the Internal Revenue Code and Treasury Regulations. This article will outline the primary forms required by U.S. based LLC's for tax filing with the Internal Revenue Service. Each section will deal with specific types of LLC''s.

Single operator or partnership LLCs


A Limited Liability Corporation with one owner and/or operator is the most simple in terms of tax filing forms. The reasons this is so is because income earned through a single owner/operator LLC is not subject to withholdings or separate business filing classification. Consequently the only documents needed for such a business are the one's associated with an individual tax filing and/or sole proprietorships. Some of the tax forms required are provided below.

• Form 1040 (Individual, Joint or Household Tax Filing Form)
• Form 8829 (Expenses for Business Use of Your Home)
• Schedule C (Sole Proprietorship Profit or Loss addendum to 1040)
• Schedule A (Individual, join or household itemized deductions if any)

Limited Liability Corporations with several owners have different filing requirements. These LLC's require different tax forms in addition to standard tax forms such as the form 1040. The tax forms that can be used for an LLC Partnership are listed as follows:

• Form 1065 (U.S. Return of Partnership Income)
• IRS publication 541 may also be of assistance when filing as a partnership
• Form 4562 (Property related documentation of depreciation)

Corporate LLCs


If a Limited Liability is an S or C corporation, the company will be treated as a separate business entity in terms of tax filing requirements.

• Form 1120 (U.S. Corporation Income Tax Return)
• Form 1120S (U.S. Small Business Income Tax Return)

At times during the tax year an LLC corporation may change its structure either from an S corporation to a C corporation or via election of new officers. In both these instances and in other cases, the IRS requires formal filing of the event. For elections and change of business structure the following forms are required.

• Form 2553 (Election by Small Business Corporation)
• Form 8832 (Entity Classification Election)

Not for profit LLCs and LLCs with employees


In addition to the forms required for either the sole owner, partnership or corporation, Limited Liability Corporations with employees require additional tax forms to be file in regard to social security tax withholdings, Medicaid and Medicare tax, retirement deductions etc. A few of the forms commonly filed in regard to employees are the following.

• Form W2 (Employee pay and tax reductions)
• Forms 940 & 941 (Employee tax withholdings within an LLC Partnership)
• Form 1099 (Income paid out as interest, dividend or miscellaneous proceeds)

Companies that are not for profit operations such as 501(c)(3)'s may have employees and be subject to filing the above employee related forms but have different income reporting forms than for profit entities. The primary tax form filed by not for profit LLC's is as listed.

• Form 990 (Return of Organization Exempt form Income Tax)

How to file IRS tax forms for LLCs


Tax filing for LLC's can be submitted in paper to the appropriate IRS Service Center for one's 
jurisdiction or online via tax preparation software or tax service provider. To file taxes for an LLC first determine what type of LLC the business is. Either the LLC is a single owner/operator, partnership, corporation or non-profit business. An Employer Identification Number (EIN) may be needed for some LLC Partnerships and LLC Corporations. The EIN can be applied for online via the U.S. Internal Revenue Service and is also required for LLC's managing retirement and benefit plans.

Once the type of LLC has been determined one can download the individual forms and instructions directly from the Internal Revenue Service website if the business is located and operated in the United States by an individual subject to U.S. taxation. Referring to sections of the Internal Revenue Code or Treasury Regulations may only be needed in complex tax situations and my require the assistance of a tax professional for interpretation.

The information in this article has been sourced from the U.S. Internal Revenue Service and can help determine which forms are needed for tax filing. However, the advice and/or consul of the Internal Revenue Service, tax attorney, accountant or tax services agent may also be helpful. If in doubt regarding any of the tax filing procedure or questions arise regarding a specific taxation issue, ex-self employment taxes consult the IRS instruction manuals for the various forms required and then contact a tax professional and/or other reliable tax information source if additional questions remain.

Image license: Alan Cleaver, CC BY 2.0

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