Tax forms keep all businesses, including limited liability companies (LLCs), compliant with tax laws. Depending on how an LLC is set up in the United States, it might use different tax forms to report information such as income, expenses, and profit to the Internal Revenue Service (IRS). Getting these forms right and turning them in on time keeps the business out of trouble and helps maintain its legal status.

These tax forms also help owners make smart business decisions. They can reveal allowable business expenses that lower the company's overall tax bill. For LLCs with more than one member, tax forms break down how profits or losses are split up for clarity among partners. They provide a clear financial picture, support planning, and keep business finances in check for investors and other people connected to the business. Below, we'll cover what LLCs should know about tax forms, including how to file them, the documents you need, and more.

Key takeaways

• The way your LLC files taxes depends on how it's classified: single-member LLCs are treated as disregarded entities and file taxes on Schedule C attached to the owner's Form 1040, while multi-member LLCs are treated as partnerships and file Form 1065 with Schedule K-1 to each partner.
  
• LLCs can elect to be taxed as a C corporation by filing Form 8832 (using Form 1120), or as an S corporation by filing Form 2553 (using Form 1120-S).
  
• Most LLC owners must pay self-employment tax on their share of the business's income (typically 15.3%).
  
• Pass-through LLCs may qualify for the Qualified Business Income (QBI) deduction – up to 20% of qualified business income under Section 199A.
  
• Key documents to gather: business income records, expense records, asset/depreciation records, payroll records, and any 1099-NEC or 1099-K forms received.
  

How LLCs are classified for tax purposes

Default tax classifications

Single-member LLCs are treated as disregarded entities by default, meaning they're taxed the same way as sole proprietorships. The owner reports business income and expenses on their personal tax return using Schedule C, which is part of Form 1040.

Multi-member LLCs are treated as partnerships by default. They must file information returns on Form 1065. Each member then receives a Schedule K-1 that shows their share of the LLC's income, deductions, and credits, which they report on their personal tax returns.

Electing corporation status

LLCs have the option to be taxed as a corporation by filing IRS Form 8832. They can choose to be treated as an S corporation (S corp) or a C corporation (C corp). Here's the difference between them:

• C corp status: If the LLC elects to be treated as a C corp, it files its own corporate tax return using Form 1120 and pays taxes at the corporate rate. This setup can help owners lower their overall tax liability but also leads to double taxation of dividends.

• S corp status: Electing S corp status (using Form 2553) can help LLC owners save on self-employment taxes. Profits and some losses are passed through to owners' personal tax returns and taxed at individual rates, but only salaries drawn from the business are subject to self-employment tax.

Qualified Business Income (QBI) deduction (Section 199A)

Eligible owners of pass-through LLCs (single-member, partnerships, and S-elected LLCs) can deduct up to 20% of their qualified business income on their individual federal tax return.

• Form required: Form 8995 (Simplified Computation) or Form 8995-A (Complex Computation for higher earners or specified service trades/businesses).
  
• Why it matters: The deduction lowers taxable personal income without requiring itemisation, offering substantial tax relief for small businesses operating as pass-through entities.
  

Employment taxes

If the LLC has employees, it must pay employment taxes. This involves withholding the proper amount of federal, state, and sometimes local taxes from employees’ pay and paying the employer’s share of taxes.

State taxes

LLCs might also need to pay state-specific taxes such as state income tax and franchise taxes. These taxes are determined by where the LLC operates and the nature of its business.
Most states with an individual income tax allow multi-member LLCs and S corps to make an elective annual entity-level state tax filing (PTET). By paying state income taxes directly through the LLC rather than at the individual member level, the business can deduct 100% of state taxes as a federal business expense, bypassing the individual federal State and Local Tax (SALT) itemisation cap.

How to file taxes for a single-member LLC (Schedule C + Form 1040, SE tax, QBI)

By default, the IRS treats a single-member LLC as a "disregarded entity." The LLC does not file a separate federal income tax return. Instead, all profits and losses pass directly through to the owner's personal tax return.

• Form 1040 (Schedule C): Report all business gross receipts, cost of goods sold (COGS), and deductible operating expenses. The resulting net profit or loss flows directly onto Form 1040 (Schedule 1).

• Schedule SE (Self-Employment Tax): Because single-member LLC owners are considered self-employed, net earnings of US$400 or more are subject to the 15.3% self-employment tax (12.4% Social Security + 2.9% Medicare). You calculate this on Schedule SE. You can also deduct 50% of your self-employment tax as an above-the-line adjustment to income on Form 1040.

• Section 199A Qualified Business Income (QBI) Deduction: Pass-through earnings generally qualify for up to a 20% deduction on qualified business income. Calculate this using Form 8995 (Simplified Computation) or Form 8995-A (for higher taxable incomes or specified service trades/businesses).

• Quarterly Estimated Taxes (Form 1040-ES): Without employer tax withholding, owners must make four quarterly estimated tax payments (April, June, September, and January) to cover combined income and self-employment tax obligations.

How to file taxes for a multi-member LLC (Form 1065 + Schedule K-1, worked example)

The IRS classifies multi-member LLCs as partnerships by default. The business is a pass-through entity that does not pay entity-level federal income tax, but it must file an annual informational return.

• Form 1065 (U.S. Return of Partnership Income): An informational return filed by the LLC by 15 March (or the 15th day of the third month following the close of the tax year) reporting total company revenue, operating expenses, deductions, and net income.

• Schedule K-1 (Form 1065): The LLC prepares a Schedule K-1 for each partner detailing their specific distributive share of profits, losses, deductions, and credits according to the operating agreement.

• Reporting on Individual Returns: Each member takes their Schedule K-1 and reports the income on Form 1040, Schedule E (Part II). Active partners also pay self-employment tax on their share of ordinary business earnings via Schedule SE.

How to file taxes for an LLC taxed as a C corporation (Form 1120)

An LLC can elect to be taxed as a standard corporation (C corp) by filing Form 8832 (Entity Classification Election). Under this structure, the business is no longer a pass-through entity and is subject to corporate income tax rules.

• Form 1120 (U.S. Corporation Income Tax Return): The LLC files its own corporate tax return, which is due 15 April for calendar-year businesses, and pays the flat 21% federal corporate tax rate on all net profits.

• Owner Compensation (W-2 Salary): Owners who perform active work for the LLC are treated as employees and must receive a market-rate salary reported on Form W-2, subject to standard payroll taxes and income tax withholding.

• Shareholder Dividends (Form 1099-DIV): Remaining profits distributed to owners are issued as dividends. The LLC cannot deduct dividend payouts as an expense, and owners must report them as dividend income on their individual returns.

• Corporate Estimated Taxes (Form 1120-W): If the LLC expects its corporate tax liability to be US$500 or more, it must make quarterly estimated payments using the Electronic Federal Tax Payment System (EFTPS).

How to file taxes for an LLC taxed as an S corporation (Form 2553 election + Form 1120-S)

An LLC can elect Subchapter S status to maintain pass-through taxation while reducing self-employment taxes for owner-operators. To make this election, the LLC must file Form 2553 (Election by a Small Business Corporation) within 75 days of the start of the tax year or during the preceding tax year.

• Form 1120-S (U.S. Income Tax Return for an S Corporation): An informational return filed by the LLC by 15 March reporting company gross receipts, deductions, officer compensation, and net profit.

• Schedule K-1 (Form 1120-S): The LLC generates a Schedule K-1 for each shareholder showing their allocated share of ordinary business profit, which is reported on Form 1040, Schedule E.

• Reasonable Compensation via W-2: The IRS requires active owner-employees to be paid a "reasonable salary" commensurate with their role. This salary is processed through standard payroll (subject to 15.3% FICA and withholding taxes) and is deducted as a corporate business expense on Form 1120-S.

• Distributions (Self-Employment Tax Savings): Any remaining profit after paying reasonable wages can be withdrawn as shareholder distributions. Distributions pass through to the owners without being subject to the 15.3% self-employment tax.

• Section 199A QBI Eligibility: S corp pass-through profits qualify for the 20% QBI deduction, though higher-income businesses may be subject to limitations based on the total W-2 wages paid by the entity.

What documents do you need to file your LLC taxes?

To ensure accurate reporting and claim all eligible business deductions, compile comprehensive documentation across your revenue, operational costs, capital investments, and labour expenses before filing. Here's what you'll need.

Income records

• Sales and revenue summaries: Gross receipts, point-of-sale (POS) settlement summaries, online payment gateway reports (such as Stripe or PayPal), and registers of all paid customer invoices.

• Information returns received: Forms 1099-NEC (for client contractor payments over US$600), 1099-MISC (rents, royalties, prizes), and 1099-K (payment card and third-party network transactions).

• Bank and merchant account statements: Complete monthly statements for all dedicated business bank and processor accounts to verify total deposits and gross cash inflows.

• Ancillary income records: Statements for interest earned on business accounts (Form 1099-INT), dividend income, returns/allowances, or proceeds from asset sales.

Expense records

• Vendor invoices and receipts: Itemised documentation for all deductible operating expenses, including inventory purchases, software subscriptions, web hosting, professional services (legal, accounting), advertising, and office supplies.

• Dedicated business account statements: Credit card and bank records corroborating payment dates, transaction amounts, and payee names.

• Vehicle and travel mileage logs: Timely records detailing the date, starting/ending location, total mileage, and specific business purpose for all commercial travel (required whether claiming the standard mileage rate or actual expenses).

• Home office records: The exact square footage of your dedicated workspace versus total home area, along with utility bills, rent, homeowners insurance, and repair costs (if using the actual expense method).

Asset and depreciation records

• Capital purchase invoices: Receipts, bills of sale, and purchase contracts for high-value long-term assets such as machinery, specialised equipment, computers, vehicles, and office furniture.

• In-service dates: Exact dates equipment or property was placed into active business service (necessary for calculating Section 179 expensing or bonus depreciation on Form 4562).

• Prior-year depreciation schedules: Historical depreciation schedules from previous tax returns to track accumulated depreciation and basis adjustments.

• Disposition and sale documentation: Sale receipts, scrap logs, or trade-in documentation for any business assets sold, retired, or disposed of during the tax year.

Payroll records (if your LLC has employees)

• Annual payroll summaries: Detailed reports reflecting gross wages paid, bonuses, overtime, employee-paid taxes, and employer-paid payroll taxes.

• Federal payroll tax returns: Copies of quarterly federal returns (Form 941) and the annual federal unemployment tax return (Form 940).

• Year-end wage forms: Filed copies of employee Form W-2 wage and tax statements and the accompanying Form W-3 transmittal.

• Contractor payment summaries: Copies of all Form 1099-NEC filings and Form 1096 transmittals issued to independent contractors, along with signed Form W-9 records on file for each vendor.

• Benefits and retirement contributions: Documentation of employer contributions to group health plans, HSA/FSA plans, workers' compensation insurance, and qualified retirement plans (e.g., SEP-IRA, SIMPLE IRA, or 401[k]).

What business records and documentation do LLCs need?

LLCs need to maintain a range of business records and documents for legal compliance, financial transparency, and general operations. Here's what LLCs should keep on record:

• Articles of organisation: This is the document filed with the state to legally form the LLC. It includes basic information such as the LLC's name, address, and the names of its members.

• Operating agreement: While it's not required in every state, an operating agreement is highly recommended. This outlines the ownership structure, member roles, profit distribution, and procedures for handling changes and dissolving the LLC. It serves as an internal manual for running the LLC.

• Meeting minutes: If an LLC holds meetings, particularly those with multiple members, it's important to keep minutes of these meetings. This documentation should include decisions made, actions approved, and members' votes on specific issues.

• Bank statements: Regular bank statements for all accounts under the LLC's name.

• Receipts and invoices: Bills and payment receipts for all transactions, including both income and expenses.

• Accounting books: Detailed records of all financial transactions including income statements, balance sheets, and cash flow statements.

• Tax returns and documentation: Copies of filed tax returns and any related documents, which might include elections for tax status.

• Contracts and legal documents: Any contracts the LLC is a party to, including lease agreements, service contracts, and partnership agreements, as well as any legal documents related to licensing, trademarks, or other intellectual property.

• Employee and independent contractor records: Any employment-related records including employment agreements, tax forms (such as W-2s and 1099s), and details of benefits offered.

• Regulatory paperwork: Any required regulatory documents, such as health and safety inspections, professional licences, and environmental permits.

• Insurance documents: Policies and claims documents related to any business insurance including liability, property, and workers' compensation insurance.

LLC tax filing deadlines

Your LLC's federal tax filing deadline depends on how the business is classified for tax purposes (single-member, multi-member partnership, S corp, or C corp) and whether it operates on a standard calendar year (ending 31 December) or a fiscal year.

Quarterly estimated taxes

If the LLC’s income isn’t subject to withholding, members might need to make quarterly estimated tax payments to cover their expected tax liability.

• Q1 Payment: Due 15 April (covering income from 1 January–31 March)

• Q2 Payment: Due 15 June (covering income from 1 April to 31 May)

• Q3 Payment: Due 15 September (covering income from 1 June to 31 August)

• Q4 Payment: Due 15 January of the following year (covering income from 1 September to 31 December)

Annual taxes for LLCs

Annual tax obligations for LLCs vary depending on their classification and state requirements. Some industries, such as alcohol or tobacco sales, have additional tax requirements. Here’s what most LLCs can expect to pay.

Federal taxes

Single-member LLC (disregarded entity)

Single-member LLCs report income and expenses on Schedule C (Form 1040) along with personal income. The owner will pay self-employment taxes (Social Security and Medicare) on LLC income and might need to make estimated tax payments throughout the year.

Multi-member LLC (partnership)

Multi-member LLCs must file Form 1065 (information return) to report income and deductions. The LLC must issue Schedule K-1 to each member and members must report their shares on their personal income tax returns. Members might need to make estimated tax payments.

LLCs taxed as S corps or C corps

Single-member LLCs that elect to be taxed as S corps or C corps must file Form 1120-S or 1120, respectively. C corp LLCs pay corporate income tax and distribute profits to the owner as taxable dividends, while S corp LLCs are pass-through entities that do not pay federal corporate income tax or distribute taxable dividends.

State taxes

• State income tax: Most states require LLCs to pay income tax on their profits. Rates and rules vary by state.

• Franchise tax: Some states impose a franchise tax on LLCs for doing business in the state.

• Sales tax: LLCs that sell goods or certain services might need to collect and remit sales tax.

• Employment taxes: LLCs with employees must withhold and pay payroll taxes.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard or using our powerful API.

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US, automate US filings in the Dashboard, and manage global filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, VAT, and GST on:

• Digital goods and services in all US states and over 100 countries
  
• Physical goods in all US states and 42 countries
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for a sales tax in the US, let Stripe manage your tax registrations. You'll benefit from a simplified process that prefills application details – saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax automates US filings in the Dashboard, powered by TaxJar. For global filings, Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax or get started today.