how is a LLC is treated for tax purposes?
LLC is flexible and it helps to determine how one needs to be taxed. LLC is limited liability company and it is an important form of business organization. It is recognized by the states and it helps for providing limited liability protection for the sake of the owners who are made to pay taxes for their personal tax rates.
LLC us taxed usually through partnership or corporation. The
case of multiple member LLC will be in the case of
partnership.
It can also be disregarded as a different space or entity separate
from the owner.
The number of members will decide the income tax paid by LLC and it
decides if it will be treated as different business form for the
purpose of taxes.
The single member LLC pays taxes as sole proprietorship. There is
information prepared with the help of schedule C. The net income is
then brought to Line 12 of the personal tax return of the owner. In
this case form 1040 or other is used. There is disregard given to a
single-member LLC for income tax purposes.
In the case of multiple member the parternship will not pay directly to IRS. The taxes are paid by individual partners and it is based on share of ownership
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