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Taxes for an LLC

By default, LLCs do not pay income tax at the entity level. Instead, the LLC's income is passed through to the members, who must recognize their allocated income or loss on their personal tax returns. For a single-member LLC, this income is reported on the individual owner's Form 1040, Schedule C.

If an LLC elects to be taxed as a partnership and its fiscal year ends on December 31, the tax return is due April 15. The LLC must file a tax return on Form 1065 even if it does not have income or no tax is due. Amounts distributed to members or managers are accounted for on Form 1065, Schedule K-1.

An LLC with employees is required to pay federal (and sometimes state) payroll taxes and unemployment insurance. Furthermore, some states, including California, have an annual LLC fee that is based loosely on the company's net income.


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