Starting a business is a thrilling adventure filled with both challenges and opportunities. Filing taxes for your LLC for the first time can seem like a hurdle, but it’s actually a valuable learning experience. Every tax season offers a chance to understand how to optimize your deductions and accurately estimate future tax payments. With each passing year, you'll find the process becomes simpler and more straightforward. This guide will take you through how to file taxes for an LLC, important LLC tax forms and all if you should file LLC taxes if you have no income.

Table of contents

Key Takeaways:...Read more

How do I file taxes if I just started a business?...Read more

How to file taxes for an LLC...Read more

Do I file my LLC and personal taxes together?...Read more

Does an LLC need to file taxes if there is no income?...Read more

Can the IRS come after my LLC for personal taxes?...Read more

Key Takeaways:

The way your LLC is set up to be taxed will determine your tax filing process.
LLCs can be single-member or multi-member business entities.
LLC owners have to file taxes even if they did not make any money in a tax year.

How do I file taxes if I just started a business?

There are a lot of factors that new small business owners have to deal with when filing taxes for the first time.

Self-employment taxes

If your business generates over $400 in income, including self-employed individuals like LLC owners, you're required to file taxes. As an LLC owner, you'll likely need to pay self-employment taxes, which cover Social Security and Medicare, unless your LLC is taxed as a corporation. For 2024, the self-employment tax rate is 15.3%. This breaks down to 12.4% for Social Security and 2.9% for Medicare. A self-employment tax calculator can help you with your SE tax liability. Small business owners paying LLC taxes also have to make estimated tax payments throughout the year if they estimate to owe over $1,000. A quarterly tax calculator is the easiest way to do the calculation.

State taxes

While most states levy a state business tax, ni states stand out for not having a corporate state income tax, offering significant tax savings for businesses: Ohio, Nevada, Texas, Washington, Wyoming, and South Dakota. Among these, South Dakota and Wyoming are distinct as they lack both corporate income tax and gross receipts tax. Conversely, Ohio, Nevada, Texas, and Washington substitute the corporate income tax with a gross receipts tax, providing a different tax structure for businesses registered there.

Filing deadlines

Estimated tax payments are generally due in April, June, September and January of the following year. Personal tax returns are due mid-April, while business tax returns are due mid-March. Missing these deadlines can result in IRS penalties, so that's important to keep in mind when you file taxes for your LLC. For the majority of cases, you can easily file your LLC's taxes online through the IRS website or any authorized tax filing software (like FlyFin!).

Infographic entitled Tax Deadlines For LLC Owners showing the 2024 LLC deadlines to file taxes.

Tax deductions

The IRS requires that all deductions be “ordinary” and “necessary” for your business. You can write off certain start-up costs, like purchasing equipment used solely for business purposes. Insurance premiums for health, business, commercial auto or workers’ compensation coverage are also deductible through your business. If you use your personal vehicle for business travel, keep a logbook of your business mileage. The IRS lets you take the standard mileage deduction or deduct your actual business-related expenses after calculating your business use percentage. Advertising expenses, including online marketing, business cards and promotional materials are deductible. Professional services like CPA fees, legal fees and consulting services are also deductible. A 1099 tax calculator can help small business owners find relevant deductions.

How to file taxes for an LLC

When you're filing business taxes for an LLC for the first time, the number of members in an LLC plays a big role in its tax setup. Here's the deal: if you're a single member or part of a partnership, get ready to pay those self-employment taxes. If you're dealing with a multi-member LLC taxed as a corporation, you'll be following a different set of corporate tax rules. For single-member entities, filing taxes is usually done on Schedule C, reporting profit or loss on Form 1040, just like individuals who are employed, unemployed or retired.

Infographic entitled Types of LLCs for business owners filing business taxes for an LLC for the first time.

When you report business results on Schedule C in your personal tax return, it's called a disregarded entity or a pass-through entity. This means that any profit or loss goes to you, and the business itself doesn't pay taxes. It's a straightforward process that keeps things simple for sole proprietors. In a multi-member LLC, the pass-through entity status remains the default. In a multi-member LLC, the pass-through entity status remains the default. Each member reports the LLC's profit or loss in line with the distribution outlined in the operating agreement. By default, the IRS taxes a multi-member LLC as a partnership. While a business partnership itself doesn't pay taxes, it's still required to file annual information to report its gains and losses. Partners in the business are usually equally and personally responsible for any business debts. To report the amount passed through to each partner's share of tax, the partnership uses LLC tax form 1065. However, LLC owners can file taxes by opting for different tax classifications by filing the appropriate forms. Form 8832 allows you to choose to be classified as an entity taxable as a corporation. When you set up your business as a corporation, you gain the ability to sell shares of stock, which can be a valuable way to raise funds for your operations. Additionally, corporations have access to unique tax deductions that aren't accessible to sole proprietors or partnerships. One of the key benefits of operating as a corporation is that as the owner, you're not personally liable for business debts or legal issues. This means your personal assets are protected in the event of lawsuits or financial challenges, giving you peace of mind as you grow your business.

Do I file my LLC and personal taxes together?

When you file taxes for an LLC, it can sometimes seem like navigating a maze of rules and regulations, especially when it comes to understanding whether your LLC taxes should be filed separately from your personal taxes. For single-member LLCs, you'll typically report your LLC's income and expenses on Schedule C and attach it to Form 1040, filing everything together. Multi-member LLCs, however, require the LLC itself to file its own tax return.

Does an LLC need to file taxes if there is no income?

Even if your LLC doesn't make any money in a tax year, you might still need to file certain tax returns. The rules will vary depending on where your LLC is registered and its tax classification. In many cases, if an LLC is treated as a sole proprietorship or partnership, you won't have to file a federal income tax return if it has no income. However, some states might still require LLCs to file reports or pay fees, regardless of income. If the LLC has chosen to be taxed as a corporation, you might still need to file a tax return, even with no income. Not filing when required could lead to penalties. It's best to get advice from a tax pro about handling LLC taxes.

Can the IRS come after my LLC for personal taxes?

Typically, the IRS can't directly come after your LLC for the personal taxes of its owners or members. If the IRS determines that the LLC was used to engage in fraudulent activities, evade taxes or otherwise abuse its limited liability protection, it may "pierce the corporate veil" and hold the LLC liable for the personal tax debts of its owners or members. Also, if the LLC doesn't pay employment taxes or withhold taxes for its employees, it could be fined. You can avoid these issues by keeping clear records and staying up-to-date on the tax laws. With FlyFin, you can access expert CPA help to navigate LLC tax forms and file LLC taxes online. AI also scans your expenses and finds all the small business tax deductions you can use to lower your tax bill.

LLC tax loopholes

LLCs can use tax loopholes to lower taxable income and their tax bill. FlyFin offer expert CPA support to handle business taxes on the app.

Filing Business Taxes For LLC For The First Time? Here’s What You Need To Know