Taxes and LLCs – What Small Businesses Need to Know

What many small business owners do not know is how corporate entities are taxed. For the purposes of the IRS, a Limited Liability Company or LLC, the entity is not taxable by default. Should the owner want the LLC to be taxed as a corporation, the owner must make an election for it to be taxed as a corporation.

The IRS automatically classifies single member LLCs as a “disregarded entity” for tax purposes. The business is treated as a sole proprietorship. The owner reports earnings and pays taxes on the income generated from their LLC through Schedule C on his or her personal income tax return. 

Request a free consultation to find out whether you should make an election to have your LLC taxed as a corporation. Most businesses miss this, even when it clearly is a better choice for them.