How is an LLC taxed on its income?
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. For multiple member LLCs, an informational return is filed with the IRS and members are given K-1s. However, an LLC Can elect to be taxed as a corporation. See Tax Choices Article.
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. For multiple member LLCs, an informational return is filed with the IRS and members are given K-1s. However, an LLC can elect to be taxed as a corporation.
