Early on in a business the idea of taxes is particularly painful: expenses are high and income hoovers around zilch. This guide covers the bare minimum you’ll need to do to file taxes for your LLC.
New LLCs expecting to earn no income may not cause any taxes to be owed. Every LLC will create annual filing requirements for you, regardless of income level, that's based on the LLC's tax classification.
We are going to go over all of these situations including: single member, multi-member, partnerships, S Corps, and C Corps. You’ll learn exactly what needs to be filed, any penalties due, and the most efficient way to file your taxes.
Who’s This For?
This is intended to help active managers, LLC owners running their business and taking a salary. Filing requirements will be different for shareholders or holding companies.
When to File Single Member LLCs & Sole Props
While you may not owe taxes, at minimum you should file a Schedule C with your tax return.
| Form | Minimum to File |
|---|---|
| Schedule SE | $400 Income |
| Schedule C | Always |
| 1040-ES (Quarterly) | $1,000 taxes owed for year |
Good news here is self employment income below $400 is not subject to self employment taxes. However, you must always pay income taxes on all your earned income which includes anything from self employment, no matter how much. Filing a Schedule C is a good idea even if you do not have any income.
Your Filing Deadlines
For Calendar year taxpayers:
- Schedule SE - April 15th
- Schedule C - April 15th
- 1040-ES Q1 - April 15th
- 1040-ES Q2 - June 15th
- 1040-ES Q3 - September 15th
- 1040-ESQ4 - January 15th of the following year
Late Filing Penalties
For your quarterly estimated tax payments penalties are around 5% per month of the tax balance owed and up to 25% of the total balance owed. You can learn more about calculating and filing these penalties in our ultimate guide to self employment taxes. However you’ll have to use IRS Form 2210 to calculate and pay these penalties.
When to File Multi-Member LLCs, LPs, & Partnerships
Even if you didn’t have income you should at minimum file forms 1065 and Schedule K-1.
| Form | Minimum to File |
|---|---|
| Form 1065 | Always |
| Schedule K-1 | Always |
| Schedule E | Any Supplemental Income |
| Schedule SE | $400 Income |
| 1040-ES (Quarterly) | $1,000 taxes owed for year |
Unfortunately for partnerships or Multi-Member LLCs without any income: your future taxes can be impacted by your involvement in a given year. While you may not need to make quarterly estimated self employment payments, you should file Form 1065 and a Schedule K-1 before April 15th of the following year.
Your Filing Deadlines
- Form 1065 - March 15th
- Schedule K-1 - April 15th
- Schedule E - April 15th
- Schedule SE - April 15th
- 1040-ES Q1 - April 15th
- 1040-ES Q2 - June 15th
- 1040-ES Q3 - September 15th
- 1040-ESQ4 - January 15th of the following year
Late Filing Penalties
The late filing penalty for a 1065 Partnership tax return is $195 dollars per partner, per month, for up to 12 months. For your quarterly estimated tax payments penalties are around 5% per month of the tax balance owed and up to 25% of the total balance owed. You may find our ultimate guide to self employment taxes helpful for calculating and filing these penalties.
When to File LLCs Taxed as S Corps
Even if you didn’t have income you should at minimum file forms 1120-S and Schedule K-1. You should also expect to file employment and payroll related forms.
| Form | Minimum to File |
|---|---|
| Form 1120-S | Always |
| Schedule K-1 | Always |
| Schedule E | Any Supplemental Income |
| Employment Forms | Always (few exceptions) |
| Payroll Forms | Always |
Because member’s future taxes are impacted by their activity in a previous year, you should at minimum file forms 1120-S and Schedule K-1. You may not need to file employment or payroll forms if you paid no salaries this year, however please speak with your accountant to verify this.
Your Filing Deadlines
- Form 1120-S - March 15th
- Schedule K-1 - April 15th
- Schedule E - April 15th
- Form 941 - Last day of month of the end of quarter
- Form 940 - January 31st
- W-2 - January 31st
- W-3 January 31st
Late Filing Penalties
Charges every member a late filing penalty of $195 for each month that the 1120-S is late, for up to 12 months. For each full/partial month a 941 and or 940 is late, there’s a 5% percent penalty on the unpaid tax for each! W-2’s that are filed late incur between $50 - $260 per late form. State level payroll related penalties likely apply as well, however please refer to your relevant state agency for details.
When to File LLCs Taxed as C Corps
Even if you didn’t have income you should at minimum file form 1120. You should also expect to file employment and payroll related forms.
| Form | Minimum to File |
|---|---|
| Form 1120 | Always |
| Form 1099-DIV | Dividend of $10 or more |
| Schedule B | Interest or Dividends of $1,500 or more |
| Employment Forms | Always (few exceptions) |
| Payroll Forms | Always |
Form 1120 is an annual filing requirement regardless of your C Corps’ income. You may not need to file employment or payroll forms if you paid no salaries this year, however please speak with your accountant to be sure. If you received any dividends from the business, above $10, then you’ll need to file a 1099-DIV and Schedule B for amounts of at least $1,500.
Your Filing Deadlines
For company’s operating on a calendar year:
- Form 1120 - July 15th (for 2020)
- 1099-DIV - January 31sth
- Schedule B - Last day of month of the end of quarter
- Form 941 - Last day of month of the end of quarter
- Form 940 - January 31st
- W-2 - January 31st
- W-3 January 31st
Late Filing Penalties
5% per month of income tax that a Form 1120 has not been filed, maximum of 25% penalty. For each full/partial month a 941 and or 940 is late, there’s a 5% percent penalty on the unpaid tax for each! W-2’s that are filed late incur between $50 - $260 per late form. State level payroll related penalties likely apply as well, however please refer to your relevant state agency for details.
State Level Filings
This guide mostly covers federal filings. Some states like California have requirements and taxes for even regular pass-through LLCs. Please do your own research to be sure you do not owe any taxes or filings in your state.
IRS Form Resources
This is a list of all the forms that are referenced above. However you may need different forms depending on your situtation.
Employment Forms:
Payroll Forms:
Filing Options & Tradeoffs
For those of you with insignificant or non-existent Income I’ve added my thoughts on using business tax software. As a general rule tax software does the bare minimum and frequently creates problems for you down the road. That said if you have no income and you’re not worried about possibly forgoing deductions tax software can help.
I’ve based the following on the business edition of the most popular option: TurboTax. However, please do your own research to determine if your tax software can handle your situation. I’m not affiliated with TurboTax and I’m not recommending them.
Single Member LLC / Sole Prop - Yes, all forms you’ll need are supported.
Multi-Member/Partnership - Yes, all forms you’ll need are supported. However double check this and do extra research.
LLC/S-Corp - I wouldn’t recommend using tax software, I’d hire an accountant.
LLC/C-Corp - I wouldn’t recommend using tax software, I’d hire an accountant.
Is It Worth Getting an Accountant?
This is just my opinion as a small business owner: even if your income is low, an accountant is still a good idea. They will not only ensure your filing everything correctly, but can help you plan to make the most of any current losses. Most importantly, finding a good accountant can take time so the sooner you start the better!
Next Steps
You should now have a solid idea if your LLC needs to file and the major items that you’ll want to prepare. If you’re late to the game at least now you know when you should have filed in addition to any penalties you currently owe. Because all LLC should be filing something at tax time you’ll have some options for making sure it’s done correctly.
Finally here is my big takeaway for you growing businesses: start looking for your small business accountants or CPA today. They’ll know how to make the most of your current losses and how to protect your future income. You can learn more about the right time to hire an accountant here.
