However, before making a decision, itвЂ™s important to understand the basics of an S corp and what changes may be in store for your business if you decide to elect S corp status. LetвЂ™s examine what small business taxes may look like for a limited liability company (LLC).

Of course, the kinds of taxes small business owners pay will vary depending on its entity formation. It is a tax classification with specific rules that can be beneficial to your company if your business earnings are significant. The federal income tax extension aside, all other deadlines for filing small business taxes appear to be on schedule for this year. This is also known as 'double-taxation.вЂќДЄn SВ corporationВ allows the member(s) of a company to save on taxes. They then distribute profits to shareholders, and shareholders pay income tax on the dividends. The two corporate tax classifications are C corporation ( CВ corp) and S Corporation ( SВ corp).ДЄ CВ corporationВ pays taxes on gross income minus all operating expenses. However, under certain circumstances, both single-member LLCs and multi-member LLCs can also elect to be taxed like a corporation. These are the standard tax structures for limited liability companies and do not require a special election when forming. These basic rules are outlined in our LLC corporate veilВ article.ДЇor most people starting an LLC, the default tax structures-вЂњdisregarded entityвЂќ for single-member LLCs or вЂњpartnershipвЂќ for multi-member LLCs-are probably the most appropriate. To ensure you get these benefits, you should conduct your business in a formal way. Yes.В Even though the IRS ignores the LLC structure when it comes to taxation, donвЂ™t worry-you still get the benefits of personal asset protection and deduction of business expenses. If the IRS treats my single-member LLC as a disregarded entity, do I still get the benefits of being an LLC? This process is explained more in our How Do I Pay Myself From My LLCВ guide. You will have to pay self-employment taxes on your distribution but, because you already paid income tax on the LLCвЂ™s total profits, you do not have to pay income tax on the distribution. With your LLC income, you can pay yourself with a distribution. The LLCвЂ™s income is reported on your personal tax return at the end of the year. Single-member LLCs are taxed by the IRS as вЂњDisregarded Entities.вЂќ This just means the IRS ignores the structure of your business (i.e., the fact that it's a single-member LLC) and taxes you like it does a sole proprietorship.

Filing taxes for small business llc