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Frequently Asked Tax Questions And Answers
Keyword: Limited Liability Company (LLC)
12.1 Small Business/Self-Employed/Other Business : Entities: Sole Proprietor, Partnership, Limited Liability Company/Partnership (LLC/LLP), Corporation, Subchapter S Corporation
I recently formed a limited liability company (LLC). The LLC has no employees.
Do I need a separate Federal Tax ID number for the LLC?
No, you will not need a separate Federal Tax ID number for the LLC if you are the
sole owner of the LLC and the LLC has no, employees. If you are not the sole owner
of the LLC or if the LLC has employees, you will need a separate Federal Tax ID number
for the LLC.
References:
- Publication 1635 (PDF), Understanding your EIN - Employer
identification Number - IRS
- Form SS-4 (PDF), Application for Employer
Identification Number
- Form 8832 (PDF), Entity Classification
Election
As a Domestic LLC (limited liability company), what forms do I use to file
a return?
The form you use will depend on what kind of entity your business is for Federal
tax purposes. Following are some general guidelines and the forms which go with each
entity:
If your business has only one owner, it will automatically be considered to be
a sole proprietorship (referred to as an entity to be disregarded as separate from
its owner) unless an election is made to be treated as a corporation. A sole proprietorship
files Form 1040 (PDF), U.S. Individual Income Tax
Return and will include Form 1040, Schedule C (PDF), Profit
or Loss from Business, or Form 1040, Schedule C-EZ (PDF) and Form 1040, Schedule SE (PDF) , if net income $400.00. If an election
is made to be treated as a corporation, Form 1120 (PDF), U.S.
Corporation Income Tax Return, is filed.
If your business has two or more owners, it will automatically be considered to
be a partnership unless an election is made to be treated as a corporation. A partnership
files Form 1065 (PDF), U.S. Partnership Return of
Income. If an election is made to be treated as a corporation, Form 1120 (PDF), U.S. Corporation Income Tax Return, is filed.
The election referred to is made by filing Form 8832 (PDF), Entity
Classification Election.
References:
For IRS purposes, how do I classify a limited liability company? Is it a
sole proprietorship, partnership or a corporation?
A limited liability company (LLC) is an entity formed under state law by filing
articles of organization as an LLC. Unlike a partnership, none of the members of an
LLC are personally liable for its debts. An LLC may be classified for Federal income
tax purposes as a sole proprietorship (referred to as an entity to be disregarded
as separate from its owner), partnership or a corporation. If the LLC has only one
owner, it will automatically be considered to be a sole proprietorship (referred to
as an entity to be disregarded as separate from its owner), unless an election is
made to be treated as a corporation. If the LLC has two or more owners, it will automatically
be considered to be a partnership unless an election is made to be treated as a corporation.
If the LLC does not elect its classification, a default classification of partnership
(multi-member LLC) or sole proprietorship (single member LLC) will apply. The election
referred to is made using the Form 8832 (PDF), Entity
Classification ElectionIf a taxpayer does not file Form 8832 (PDF) , a default classification will apply.
References:
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