Business Structures & Tax Returns
Limited Liability Company (LLC)
A limited liability company, commonly called an “LLC,” is a business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation. Owners, also called members of the LLC can include individuals, corporations, other LLCs and foreign entities. There is no maximum number of owners.
Tax Return for an LLC
Single member LLC: The LLC’s income and expenses are reported on Form 1040 (Schedule C,E, or F). If the only member of an LLC is a corporation, then form 1120, or 1120S will be filed.
Multiple Member LLC: Most LLCs with more than one member will use Form 1065 to report the income gains, losses, deductions, credits, etc. of the business.
LLC tax return is due March 15thfor the prior year.
S corporations are corporations that elect to pass income, losses, and deductions to their shareholders for tax purposes.
Requirements for S Corporation structure:
- Must be a domestic corporation
- Have only allowable shareholders: which means individuals, trusts and estates, not partnerships, corporations or non-resident aliens.
- Contain no more than 100 shareholders
- Have only one type of stock
Tax Returns for an S-Corp
Form 1120Sis the form used for the annual S-Corp tax return. Additionally, the S-Corp is responsible for attaching a Schedule K-1for each shareholder.
S-Corp tax returns are due March 15thfor the prior year.
A C corporation, under federal tax law, refers to a corporation that is taxed separately from its owners. Most major companies are treated as C corporations. While both S and C corporations enjoy limited liability, only C corps are subject to corporation income taxation.
Tax Return for C-Corps
Form 1120is used for filing taxes for C-Corporations.
Taxes are due the 15thday of the 3rdmonthafter the end of the corporation’s fiscal year. If the C-Corp chooses a traditional calendar year (year end 12/31), taxes are due April 15th.
The sole proprietor refers to an individual who owns the business and is personally liable for its debts. This type of business structure is common due to its simplicity and nominal startup costs.
Tax Return for a Sole Proprietor
Form Schedule Cis filed for sole proprietors reporting income, losses and expenses, along with the standard Form 1040. The “bottom line” amount on the Schedule C is transferred to the business owners personal tax return.
As a sole proprietor you must also file a Schedule SE with Form 1040. This calculates how much self-employment tax you may owe.
The Schedule C is due April 15th.
Tax Exempt Organizations
Exempt organizations include charitable, religious, scientific, literacy and other organizations exempt under the IRS code section 501(c)3. These organizations must apply for exemption status.
Tax Forms for Exempt Organizations and Clubs
Form 990is used for annual filings for the 501c3 organizations.
Form 990, 990-EZ, or 990PF must be filedby the 15thday of the 5thmonthafter the end of the organization’s fiscal year. If using a standard calendar year, the due date is May 15th.