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Understanding and Filing Taxes for Your LLC
Filing taxes for your LLC in California means knowing what you need to do for both federal and state taxes. Here’s a simple guide to help you understand the key tax requirements and how to file them:
Once you start making money, hiring an accountant could be a smart move so you can focus on your business. For a single-member LLC, expect to pay between $200 and $600 per year. For a multi-member LLC, the cost ranges from $500 to $1,500 or more annually, depending on how complex your business is and where you're located.
Single-Member LLC (One member)
If you own a single-member LLC, the process is straightforward:
- Federal Taxes:
- File Schedule C (Form 1040): This form is used to report the income and expenses of your business. It gets attached to your personal tax return.
- File Schedule SE: This form is used to calculate and report self-employment taxes, which cover Social Security and Medicare taxes for self-employed individuals.
- State Taxes:
- Annual Franchise Tax: Form 3522 with a $800 fee.
- Estimated Fee: Form 3536 if your income from California is $250,000 or more.
- LLC Return of Income: Form 568, filed annually.
- Local Taxes: Business license and local business taxes (check with your city or county).
Estimated Single-Member Tax Due Dates
| Form | Description | Due Date |
|---|---|---|
| Schedule C (Form 1040) | Report income and expenses of your business | April 15 (with personal tax return) |
| Schedule SE | Calculate and report self-employment taxes | April 15 (with personal tax return) |
| Form 3522 | Pay annual franchise tax | April 15 |
| Form 3536 | Pay estimated fee if income is $250,000 or more | June 15 |
| Form 568 | File LLC return of income | April 15 |
Multi-Member LLC (More than one member)
If you have a multi-member LLC, here's what you need to do:
- Federal Taxes:
- File Form 1065 (Partnership Return): This form is used to report the partnership's income, deductions, and credits. It is filed by the LLC.
- Provide Schedule K-1: This form is provided to each member to report their share of the partnership's income, deductions, and credits on their personal tax returns.
- State Taxes:
- Annual Franchise Tax: Form 3522 with a $800 fee.
- Estimated Fee: Form 3536 if your income from California is $250,000 or more.
- LLC Return of Income: Form 568, filed annually.
- Local Taxes: Business license and local business taxes (check with your city or county).
Estimated Multi-Member Tax Due Dates
| Form | Description | Due Date |
|---|---|---|
| Form 1065 | Report partnership income, deductions, and credits | March 15 |
| Schedule K-1 | Report each member's share of income, deductions, and credits | March 15 |
| Form 3522 | Pay annual franchise tax | April 15 |
| Form 3536 | Pay estimated fee if income is $250,000 or more | June 15 |
| Form 568 | File LLC return of income | April 15 |
How to File
Filing your taxes can be simple if you follow these steps:
- Federal Taxes:
- Use the IRS e-file system or mail your forms. TurboTax can help you with the filings. Forms include Schedule C (Form 1040) and Schedule SE for single-member LLCs, and Form 1065 and Schedule K-1 for multi-member LLCs.
- State Taxes:
- Pay and file online through the California Franchise Tax Board (FTB) website, or mail your forms. Forms include Form 3522, Form 3536, and Form 568.
- Local Taxes:
- Apply for and pay your local business taxes through your city or county's website or office.
- Using Tax Software:
- TurboTax can simplify the process for both single-member and multi-member LLCs, helping you with federal and state filings.
Staying on top of your tax obligations will help keep your LLC compliant and avoid penalties. It's a good idea to consult with a tax professional regularly to stay updated on any tax law changes.