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Do I File Taxes Separately From My LLC?

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Do I File Taxes Separately From My LLC?

If you're a small business owner, combining your personal and business tax filings might seem like a great way to save time and money. And for some, it really is! But, it's not a one-size-fits-all solution. If you're asking "Do I file my LLC and personal taxes together?" you're in the right place. Whether you can or should file them together really depends on your business structure and how you've registered your company with the IRS. So, it's important to figure out what works best for your specific situation.

Table of contents

Key Takeaways:...Read more

How does an LLC affect my personal taxes?...Read more

When can I file myLLC and personal taxes separately?...Read more

When can I file my LLC and personal taxes separately?...Read more

How do I know when to file personal and LLC taxes together?...Read more

How to file LLC taxes efficiently...Read more

Key Takeaways:

  • LLC owners have to file personal and business taxes together or separately based on their business structure.
  • Single-member LLCs can file as sole proprietors.
  • Multi-member LLCs can file as partnerships, S Corps or C Corps.

How does an LLC affect my personal taxes?

Forming an LLC can provide essential protection for your business. However, one of the most crucial decisions you'll make is choosing its tax classification. The IRS gives LLCs the flexibility to select their tax status, which directly impacts your business’s tax obligations and the way you file your returns. As tax season approaches, you might wonder if you can file your LLC and personal taxes separately. The structure of your LLC is usually the key factor here, and it also determines how you can pay yourself from the LLC. In most states, an LLC is automatically treated as a pass-through entity, and the IRS does the same. This means you and your business are seen as one taxpayer by the IRS. Occasionally, you may be required to file tax returns, but only as informational returns. Instead, all company income is taxed at your individual income tax rate. If you have an LLC that’s taxed as a partnership, you can combine and file your personal and business taxes together. However, if you choose to be taxed as a C corporation, you must file your personal and business taxes separately.
Infographic entitled When Do I File My LLC Taxes With My Personal Taxes showing  three situations where LLC taxes are combined with personal taxes.

When can I file myLLC and personal taxes separately?

LLC owners are called members, and the setup laws and costs depend on the state where your business operates. The IRS classifies LLCs in two ways. Single-member LLCs are automatically treated as "disregarded entities," meaning the IRS views you and your LLC as the same taxpayer. For multi-member LLCs, the IRS generally treats them as partnerships. This means the partnership itself isn't taxed directly. Instead, each member reports their share of the profits and losses on their personal tax returns. Sole proprietorships are the most straightforward and widespread business structure. Basically, the IRS treats you and your business as one. That means you get to keep all the profits, but you're also on the hook for any debts or losses. As an independent contractor, you're automatically a sole proprietor. If you run an unincorporated business on your own, you need to report your business income on your personal tax return using Schedule C. Plus, if you make over $400 in net earnings, you'll also need to fill out Schedule SE and include it with your return for paying self-employment taxes. Owners of a single-member LLC can also take advantage of business tax deductions, which cover various expenses essential for running your business, like office supplies, travel expenses and CPA fees. A 1099 tax calculator can help find all your LLC tax deductions.
Infographic entitled Tax Forms For Single-Member LLCs listing important sole proprietor LLC tax forms.
However, if your LLC is making a profit, it's important to stay ahead of your taxes by making quarterly estimated tax payments throughout the year. This helps you avoid penalties and fines from the IRS. You can use an estimated tax calculator to find your owed tax liability. Like sole proprietors, partnerships are also considered pass-through entities. However, LLCs taxed as partnerships have an extra step to ensure they're not disregarded by the IRS: filing LLC tax form 1065, where revenue and tax deduction details are provided. In a partnership, profits are distributed among partners based on their agreed-upon percentages. Each partner then reports their share of the business income on their individual tax return. The IRS issues Schedule K-1 to each partner, detailing their earnings portion. This information from Schedule K-1 is used to complete Schedule E of Form 1040 when filing the individual tax return with the IRS. A corporation functions as an independent legal entity distinct from its owners. S Corporations follow a tax structure similar to sole proprietorships and partnerships, generally known as pass-through taxation. This is where the shareholders of S Corps report their share of income and losses on their personal taxes. To do this, shareholders must first file Form 1120-S. Subsequently, they receive a K-1 from the S Corps, which they use to report their portion of income on Schedule E of their personal tax return.

When can I file my LLC and personal taxes separately?

If your LLC is taxed as a C Corp, taxes may be a little more complicated. There are big differences between C corporations and other business types. Unlike other business structures, C corporations can't opt for pass-through taxation; they always have to file taxes separately. Form 1120 is the main tax form for C Corps. C Corps pay a flat 21% tax on their earnings before distributing dividends to shareholders. Shareholders get Form 1099-DIV for dividend income to report on their personal taxes. If you're a shareholder involved in running the company, you might also get W-2 wages as an employee. So, you'd report and pay taxes on both your W-2 wages and any dividend income.

How do I know when to file personal and LLC taxes together?

If you're grappling with the decision of whether to file your business taxes separately from your personal tax return, there are several factors you should consider. Firstly, think about simplicity. Choosing pass-through taxation and bundling your business and personal taxes together can really simplify things. It's like getting two tasks done at once, just like how sole proprietorships and partnerships handle it. Secondly, think about the level of limited liability protection you want. While an LLC inherently offers liability protection, electing corporate taxation could potentially heighten this protection by segregating business liabilities from personal ones, just like a traditional corporation. Lastly, look at the tax rates associated with your chosen structure. Corporate tax rates may differ significantly from individual tax rates, and this can potentially impact your overall tax liability. Therefore, it's essential to weigh these rates carefully in your decision-making process.

How to file LLC taxes efficiently

Handling tax filings for your LLC can feel like a maze, but there are a few strategies that you can use to guide you. The most important thing is to separate your personal and business finances, and keep them that way. Mixing them up can turn your tax filings process messy. Stick to a dedicated business account for all your business transactions to keep things organized.
Infographic entitled How To File Business And Personal Taxes Efficiently listing ways to tackle LLC taxes.
Next, don't leave money on the table. Make sure to use all the business tax deductions that are available. Track your home office expenses, jot down your travel costs and don't forget about those business insurance premiums – they all add up and can save you come tax time. Additionally, you should regularly set aside funds to cover tax liabilities. Setting aside a little chunk of your income regularly can save you from tax season stressors and keep your finances running smoothly. You also should pay close attention to worker classification. Misclassifying independent contractors as employees or vice versa can lead to legal and financial pitfalls. FlyFin can help LLC owners prepare and file their returns with the help of expert CPAs. The CPAs also offer unlimited tax support and can answer questions like do I file LLC and personal taxes together and can the IRS go after my LLC for personal taxes. AI also scans your expenses to find all the deductions that can lower your tax bill.

What are LLC tax filing deadlines in 2024?

Knowing the LLC tax filing deadline is important for business owners. FlyFin’s Ultimate Plan can help you navigate LLC taxes and calculate exactly how much you owe.

How to get tax ID for LLC?

LLCs need a tax ID number if they want to hire employees, open a business bank account, file federal taxes or apply for certain business licenses.

How to file taxes for LLC?

An S Corpcomes with different tax, formation and shareholder requirements. It's an option for business owners looking to save on corporate taxes.

How to file taxes for LLC with no income?

LLCs who did not make an income still have to file tax returns. FlyFin CPAs offer unlimited tax support for small business owners on the app.

How to file business taxes for the first time?

There are many things taxpayers need to know when filing business taxes for an LLC for the first time. FlyFin offers expert and unlimited CPA tax support on the app.

Every LLC Tax Filing Form You Need: Explained

Paying LLC taxes will depend on your business structure. You should use LLC tax return Form 1065 if you’re taxed as a partnership.

How to file quarterly taxes for LLC?

LLC quarterly taxes are owed on tax liabilities over $1,000 by LLC members. The LLC tax filing deadline can vary depending on the entity classification.

What are LLC tax filing deadlines in 2024?

Knowing the LLC tax filing deadline is important for business owners. FlyFin’s Ultimate Plan can help you navigate LLC taxes and calculate exactly how much you owe.

How to get tax ID for LLC?

LLCs need a tax ID number if they want to hire employees, open a business bank account, file federal taxes or apply for certain business licenses.

How to file taxes for LLC?

An S Corpcomes with different tax, formation and shareholder requirements. It's an option for business owners looking to save on corporate taxes.

How to file taxes for LLC with no income?

LLCs who did not make an income still have to file tax returns. FlyFin CPAs offer unlimited tax support for small business owners on the app.

What’s FlyFin?

FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! FlyFin tracks all your business expenses automatically using A.I. to find every possible tax deduction. Then, the CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes. Download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
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