Taxing An LLC

For tax purposes, an LLC is not considered separate from its owner. Partners in an LLC are taxed on their share of profits on their individual tax returns. LLCs do not generally pay taxes themselves. If they have significant profits, partners of an LLC my opt to have the LLC taxed on its own, reducing the member's personal tax liability. The IRS treats an individual LLC owner like a sole proprieter. The LLC doesn't pay its own taxes, its profits are taxed on the owner's individual return. All profits are reported on a Schedule C and filed with the 1040 tax return. If multiple owners are involved, profits are taxed based on the owner's proportion of interest in the business. A co-owned LLC must file a Form 1065 with the IRS, issue a Schedule K to its members so all profits can be reported whether or not payments were made to the principles. For further information, contact your tax professional and consult www.irs.gov