Key steps to file LLC taxes
- Determine your LLC’s federal tax classification (disregarded entity, partnership, C corporation or S corporation)
- Get an Employer Identification Number (EIN) if you need one for employees, a multi-member LLC, a corporate tax election or your bank
- Gather your financial records and complete the right federal tax form: Form 1040 Schedule C for single-member LLCs, Form 1065 with Schedule K-1 for multi-member LLCs, Form 1120 for C corporations or Form 1120-S for S corporations
- Pay estimated quarterly taxes if you expect to owe $1,000 or more in federal tax for the year ($500 or more for an LLC taxed as a C corporation)
- File your federal return by the deadline (April 15 for single-member LLCs and C corporations, March 15 for partnerships and S corporations, for calendar-year businesses), plus any state returns and reports
- Keep accurate records of income, expenses and tax payments to support your deductions
Federal tax forms by LLC classification
| LLC tax classification | Tax form |
|---|---|
| Single-member LLC (default) | Form 1040 with Schedule C |
| Multi-member LLC (default) | Form 1065 with Schedule K-1 |
| LLC taxed as a C corporation | Form 1120 |
| LLC taxed as an S corporation | Form 1120-S with Schedule K-1 |
How do LLC taxes work?
By default, an LLC is a pass-through entity: the LLC itself doesn’t pay federal income tax. Instead, its profits and losses pass through to the owners (called members), who report them on their personal tax returns, just like a sole proprietorship or partnership.
Depending on where it operates and whether it has employees, an LLC may also owe other taxes, such as payroll taxes, sales tax and state taxes or fees. Some states charge LLCs an annual tax or fee whether or not they make a profit.
If pass-through taxation isn’t the best fit, you can elect to have your LLC taxed as an S corporation or C corporation instead.
LLCs are flexible, so you can choose from 4 federal tax classifications:
1. Single-member LLC: by default, the IRS treats a single-member LLC as a “disregarded entity”, taxed like a sole proprietorship. The LLC doesn’t file its own income tax return; you report its income and expenses on Schedule C with your Form 1040.
2. Multi-member LLC: by default, the IRS taxes a multi-member LLC as a partnership. The LLC files an information return (Form 1065), but it doesn’t pay income tax. Each member pays tax on their share of the profits, called their distributive share, which is usually set out in the operating agreement.
3. S corporation: an LLC can elect S corporation tax treatment by filing IRS Form 2553. Profits still pass through to the owners, but owners who work in the business must pay themselves a reasonable salary, which is subject to payroll taxes. The remaining profit isn’t subject to self-employment tax, which can lower the overall tax bill.
4. C corporation: an LLC can elect C corporation tax treatment by filing IRS Form 8832. The LLC pays corporate income tax (21%) on its profits, and owners pay tax again on any dividends they receive, known as double taxation. Owners who work in the business are paid wages, subject to payroll taxes.
Learn more about S corporations and C corporations.
Your tax responsibilities as an owner
As an LLC owner, you’re responsible for paying income tax on your share of the LLC’s profits and, in most cases, self-employment tax.
Self-employment tax covers Social Security and Medicare at a combined 15.3% of your net earnings: 12.4% for Social Security (on earnings up to $184,500 in 2026) and 2.9% for Medicare.
Because no employer withholds tax from your LLC income, you’ll usually need to file an annual return and make estimated tax payments during the year. It’s up to you to estimate accurately and pay on time.
Income taxes
The federal government and 41 states, plus Washington, D.C., tax wage income. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming don’t (Washington does tax some capital gains).
Federal income tax rates for 2026 range from 10% to 37%: the more taxable income you have, the higher the rate on each extra dollar.
States with an income tax use either a flat rate, where everyone pays the same percentage, or progressive rates, where the rate rises with income.
Before you move your business to a state with no income tax, compare its other taxes and fees too, such as sales, property, franchise or gross receipts taxes. Texas and Tennessee, for example, have no personal income tax but do tax many businesses.
Default LLC taxation
The IRS doesn’t have a separate tax classification for LLCs. Instead, it applies a default classification based on the number of members: a single-member LLC is taxed as a disregarded entity (like a sole proprietorship), and a multi-member LLC is taxed as a partnership.
If you want corporate tax treatment instead, you have to elect it with Form 8832 (C corporation) or Form 2553 (S corporation). Otherwise, your LLC is taxed as a pass-through entity, also called a flow-through entity.
Pass-through taxation
With pass-through taxation, the LLC’s profits and losses flow through to the owners’ personal tax returns, and each owner pays tax on their share of the profits.
Advantages of pass-through taxation
1. No double taxation: corporations pay tax on their profits, and shareholders pay tax again on dividends. With pass-through taxation, profits are taxed only once, on the owners’ returns.
2. Business losses can offset other income: if the business has a loss, owners may be able to use it to reduce their other taxable income, subject to IRS limits.
3. The QBI deduction: many owners of pass-through businesses can deduct up to 20% of their qualified business income. The deduction was made permanent in 2025, though limits apply at higher incomes and for some service businesses.
4. Flexibility: you can elect S corporation or C corporation tax treatment later if it saves you money.
Disadvantages of pass-through taxation
1. Tax on profits you don’t take out: members pay tax on their full share of the profits, even profits left in the business.
2. Self-employment tax: owners usually pay 15.3% self-employment tax on their share of the profits, on top of income tax.
3. State rules vary: some states charge LLCs extra taxes or fees on top of personal income tax.
Key pass-through takeaways
- A pass-through business passes its profits and losses to its owners’ tax returns
- Profits are taxed once, on the owners’ returns, rather than at both the business and owner level
- Owners usually pay self-employment tax on their share of the profits
- Sole proprietorships, partnerships, S corporations and LLCs taxed by default are all pass-through businesses
Self-employment taxes
If you’re an LLC member taxed by default, the IRS treats you as self-employed, so you’ll usually owe self-employment tax on your share of the profits.
Self-employment tax is 15.3%: 12.4% for Social Security (on earnings up to $184,500 in 2026) and 2.9% for Medicare. You may also owe an extra 0.9% Medicare tax on earnings above $200,000 ($250,000 for married couples filing jointly). Use Schedule SE (Form 1040) to calculate it, and you can deduct half of it on your Form 1040.
If your LLC elects S corporation tax treatment, you pay payroll taxes on your salary instead, and the rest of the profit isn’t subject to self-employment tax.
Estimated quarterly tax payments
The U.S. has a pay-as-you-go tax system, so if no one withholds tax from your income, you have to pay income and self-employment tax during the year.
If you expect to owe $1,000 or more for the year, make estimated tax payments by these dates (the next business day if a date falls on a weekend or holiday):
- 1st payment: April 15
- 2nd payment: June 15
- 3rd payment: September 15
- 4th payment: January 15 of the following year
LLCs taxed as C corporations make estimated payments if they expect to owe $500 or more, due on the 15th day of the 4th, 6th, 9th and 12th months of their tax year (April 15, June 15, September 15 and December 15 for calendar-year corporations).
You can pay with Form 1040-ES, through your IRS online account or IRS Direct Pay, or, for businesses, through the Electronic Federal Tax Payment System (EFTPS). Keep a record of every payment, because you’ll report them on your tax return.
What if you pay late?
If you miss an estimated payment or pay too little, the IRS can charge an underpayment penalty, even if you get a refund when you file.
If you need more time to file your return, you can request an extension: Form 4868 for single-member LLCs filing with Form 1040, and Form 7004 for partnerships and corporations. An extension gives you more time to file, not to pay, so pay what you expect to owe by the original deadline to avoid penalties and interest.
State taxes and fees
Most states follow the IRS: LLC profits pass through and members pay state income tax on their personal returns. But many states add their own taxes or fees.
Additional taxes in some states
Some states charge an extra tax or fee based on the LLC’s income or revenue, on top of the members’ income tax. For example, California charges an LLC fee on top of its $800 minimum annual tax once California gross receipts reach $250,000.
Many states also let pass-through businesses elect to pay state income tax at the entity level (a pass-through entity tax), which can help owners with the federal limit on state and local tax deductions. Ask a tax professional whether it makes sense for you.
Annual fees in some states
Many states charge a yearly fee or tax, also called a franchise tax, annual report fee or annual registration fee. These range from $0 to $500 in most states; California’s minimum is $800 a year. See our LLC cost guide for each state’s fees and our guide to the LLC annual report.
Key estimated tax takeaways
- If you’re self-employed, you’ll probably need to pay estimated taxes quarterly
- Late or low payments can lead to an underpayment penalty
- Some states charge LLCs extra taxes or annual fees
LLC payroll taxes
If your LLC has employees, including owners paid a salary through an S corporation election, it must withhold and pay payroll taxes.
Payroll taxes include:
- Social Security and Medicare (FICA): you and your employee each pay 6.2% for Social Security (on wages up to $184,500 in 2026) and 1.45% for Medicare, for 7.65% each. You also withhold an extra 0.9% Medicare tax from wages above $200,000.
- Federal income tax withholding: withheld from each paycheck based on the employee’s Form W-4.
- Federal unemployment tax (FUTA): paid by the employer only, not withheld from wages.
- State payroll taxes: such as state unemployment insurance and, in most states, state income tax withholding.
You report payroll taxes on IRS Form 941 each quarter and Form 940 (FUTA) each year. You don’t pay these taxes when you file the forms. Instead, you deposit them on the IRS schedule, usually monthly or semiweekly, through EFTPS.
LLC sales tax
If you sell taxable products or services, you may need to collect sales tax. Every state sets its own rules, and in many states cities and counties add their own rates.
Sales tax nexus
Nexus is a connection to a state that requires you to collect its sales tax. You have nexus in your home state, and you can also create it in other states, for example through:
- A physical presence: an office, store, warehouse or employees in the state
- Inventory: including inventory stored in an Amazon FBA warehouse
- Economic nexus: passing the state’s sales or transaction threshold (often $100,000 in sales). Every state with a sales tax now has one.
- Other activities: some states count affiliates, sales reps or temporary sales, such as at trade shows
If you have nexus in a state and sell taxable products there, you must register for a sales tax permit and collect tax from buyers in that state. Marketplaces such as Amazon and Etsy collect and remit sales tax for you in most states.
Origin-based vs. destination-based sales tax
Most states use destination-based sales tax: you charge the rate where your customer receives the product. A few states use origin-based sales tax for in-state sales, where you charge the rate at your business location. Check your state’s revenue department for its rules.
Product taxability
Most tangible products are taxable, but each state decides what’s exempt. For example, most states exempt groceries or tax them at a reduced rate, prescription drugs are exempt in nearly every state, and a few states, such as Pennsylvania, exempt most clothing. Check your state’s tax website before you set your prices.
Resale certificates
If you buy products to resell, you can usually give your supplier a resale certificate so you don’t pay sales tax on those purchases. You’ll collect the tax from your customer instead. Each state has its own certificate, and some accept the multistate Streamlined Sales Tax certificate.
How to file taxes as an LLC
As an LLC member, you’re responsible for setting aside enough money to pay tax on your share of the profits, and for making estimated payments to the IRS and your state during the year. Here’s how filing works for each type of LLC.
Filing as a single-member LLC
The IRS treats a single-member LLC like a sole proprietorship. You report the business’s income and expenses on Schedule C and file it with your Form 1040, plus Schedule SE for self-employment tax.
Filing as a multi-member LLC
The IRS taxes a multi-member LLC as a partnership. The LLC doesn’t pay income tax; instead, each member reports their share of the profits or losses on their own return.
Each member’s share, called a distributive share, is usually set out in the operating agreement.
Dividing up profits
If you want to divide profits and losses in a way that doesn’t match each member’s ownership percentage, that’s called a special allocation. It must be set out in the operating agreement and meet IRS rules.
Distributive shares and the IRS
The IRS taxes each member on their full distributive share, whether or not it’s paid out. So even if members leave profits in the LLC to grow the business, each member owes tax on their share.
File Form 1065 with the IRS
A multi-member LLC files Form 1065, an information return, by March 15 for calendar-year LLCs. It also gives each member a Schedule K-1 showing their share of the income, deductions and credits. Members report the K-1 amounts on Schedule E of their Form 1040.
Choosing corporate tax status instead
You might elect C corporation tax treatment if you plan to keep most of your profits in the business to grow it. C corporations pay a flat 21% federal tax, while owners of pass-through businesses pay their personal rates of 10% to 37%.
To elect it, file IRS Form 8832 (Entity Classification Election).
The trade-off is double taxation: profits paid out as dividends are taxed again on the owners’ returns, at up to 23.8% for qualified dividends at the highest incomes. Owners who work in the business are paid wages, which are taxed as ordinary income.
Many small businesses compare the S corporation election first, which can reduce self-employment tax without double taxation. A tax professional can help you run the numbers.
Key federal deadlines (calendar-year businesses)
| Filing | Deadline |
|---|---|
| Form 1065 (multi-member LLC) and Form 1120-S (S corporation) | March 15 |
| Form 1040 with Schedule C (single-member LLC) and Form 1120 (C corporation) | April 15 |
| Estimated tax payments (individuals) | April 15, June 15, September 15 and January 15 |
| Form 941 (payroll) | Last day of the month after each quarter |
| Form 940 (FUTA) and Forms W-2 and 1099-NEC | January 31 |
Conclusion
Taxes are one of the less exciting parts of running an LLC, but knowing how your LLC is taxed, which forms to file and when to pay helps you avoid penalties and keep more of what you earn.
If you’re just getting started, Tailor Brands can help you form your LLC. Once you’re up and running, an experienced accountant can help you choose the best tax classification, claim every deduction you’re entitled to and file on time.
FAQ
Single-member LLCs report income and expenses on Schedule C of the owner’s Form 1040, and multi-member LLCs file Form 1065 and give each member a Schedule K-1. LLCs that elect corporate taxation file Form 1120 (C corporation) or Form 1120-S (S corporation).
A single-member LLC is a disregarded entity, so the owner reports all business activity on their personal tax return (Schedule C). A multi-member LLC is taxed as a partnership and files a separate partnership return (Form 1065), plus a Schedule K-1 for each member.
Yes. An LLC can elect C corporation status by filing Form 8832, or S corporation status by filing Form 2553, if it meets IRS eligibility rules and deadlines.
If you expect to owe $1,000 or more in federal tax for the year, make estimated payments by April 15, June 15, September 15 and January 15 of the following year to avoid penalties. LLCs taxed as C corporations pay estimated tax if they expect to owe $500 or more.
Depending on the state, your LLC may need to file annual reports, pay franchise taxes or annual fees, and file income, sales or employer tax returns.
Usually, yes. Members of an LLC taxed by default pay 15.3% self-employment tax on their share of the profits. With an S corporation election, owners pay payroll taxes on a reasonable salary instead.