Can You File Your LLC And Personal Taxes Together?

Knowing how to file your taxes is simpler than it soundswhether it’s a person or a business, we all have to file taxesHere’s how you can file your LLCpersonal taxes together.

An LLC is a business structure that combines the limited liability protection of a corporation with the structure flexibility of a partnershipMost LLCs are either taxed as disregarded entities or as partnershipsare therefore subject to pass-through taxation, meaning business profitslosses are passed onto owners, known as members, who then report these amounts directly on their personal tax returnsHowever, this is not always the case.

The tax designationthe ownership structure of an LLC will determine whether you are able to file your LLC taxes together with your personal taxes.

Consider Your Ownership Structure And Tax Designation

Single-member LLCs are taxed disregarded entities, owners therefore reportpay taxes on their business profit which they submit alongside their personal tax returnsSingle-member LLC owners can simultaneously report their business profitsdeductible expenses on their personal tax returns.

Multi-member LLCs are taxed as partnershipstherefore report their total business income but not for tax-paying purpose, while each member reportspays taxes on their individual share of the business profitsTheir share of the business profit is also submitted with their personal tax returns.

LLCs that choose to be taxed as a S-corp follow very similar protocol to LLC that are taxed as partnershipsOwners of LLCs that are taxed as an S-corp are required to report their portion of the business as well as their personal tax returnsThe only difference comes in when shareholders are also employees of the LLCIn such cases, shareholder-employees must be paid a reasonable salary before distributions are made to shareholdersthey are taxed on both types of earnings.

With single-member LLcs, multi-member LLCsLLCs that elect an S-corp tax designation, the business is not a separate tax-payer from the owner, they stand together as one tax-payerIn such cases, business profits are taxed at individual tax rates, rather than at corporate tax rates.

The Odd One Out

When LLCs elect to be taxed as an C-corp is the only time the IRS regards a business as a separate tax-payer from its ownersLLCs that elect to be taxed as an C-corp are required to pay corporate tax on business profits before passing on earnings to shareholders by means of dividendsShareholders who participate in the management structure of the LLC are also considered employees,as with LLCs who elect the S-corp tax designation, they will be taxed both on their incometheir dividend earnings.

LCCs that choose to be taxed as an C-corp are subjected to corporate taxes, owners do not report their business income on their personal tax returns but are required to report their dividend incomes on their personal taxes.

The Bottom Line

When deciding whether or not to file your LLC taxes together with your personal taxes the key word is “pass-through entities”Most LLCs are considered pass-through entities because business profits are passed on, reportedtaxed on the owner or shareholder’s personal tax returnsSingle-member LLCs, multi-member LLCsLLCs who elect a S-cop tax designation are all regarded as pass-through entities, although few are required to report their business income however not for pay-paying purposesIn all cases, owners can file the LLC taxes together with their personal taxes.

It is only LLCs who elect the C-corp tax designation that are not regarded as pass-through entities, they are considered legally separate from the ownerowners are therefore required to file their LLC taxes separately from their personal tax returns.

Need Some Help?

If you want to know more about how you can file taxes for your LLC, TRUiC can be of great assistance for those of you who want more detailsKnowing when you are able to file your LLC taxes together with your personal taxes is all about understanding how the ownership structure of your LLCchoosing the right tax designation will impact how you can file your LLC’s taxes.