An Association under Regulations section A business entity formed under a Federal or State statute if the statute describes or refers to the entity as a joint stock association. A state-chartered business entity conducting banking activities if any of its deposits are insured by the FDIC. A business entity wholly owned by a state or political subdivision thereof, or a business entity wholly owned by a foreign government or other entity described in Regulations section 1. A business entity taxable as a corporation under a provision of the code other than section a 3.
Certain foreign entities see Form instructions. Insurance Company Generally, LLCs are not automatically included in this list, and are therefore not required to be treated as corporations. Publication , Partnerships. Publication , Corporations. More In File. Effective Date of Election An LLC that does not want to accept its default federal tax classification, or that wishes to change its classification, uses Form , Entity Classification Election PDF , to elect how it will be classified for federal tax purposes.
Limited Liability Company - Possible Repercussions. Powers of Attorney for LLCs. Business Structures. Page Last Reviewed or Updated: Mar Owners of an LLC that hires and pays W-2 employees are not automatically exempt from paying Self-employment taxes. For example, if Mary is the sole owner of an LLC and hires two employees who she pays regular wages, she will be required to pay applicable employment taxes associated with her employees and she will also be required to pay self-employment taxes on her own earnings from LLC income.
Even though being taxed twice may not sound appealing, there are sound reasons why LLCs might want to consider electing to be taxed as a corporation. Some of the advantages of being taxed as a corporation are:. The following are general rules of thumb for LLCs filing requirements.
It is important to note that individual LLC owners have their own obligation to file their individual tax returns, reporting income, regardless of the LLCs requirements. Each situation is unique, and it is important to consult expert advisors. Single-member LLC taxed as sole proprietorships must complete and file Form , an individual tax return.
Schedule SE must be filed for calculation and payment of self-employment tax. If they have not, a Form is filed that reports the LLCs income and deductions. The individual owners must include any dividends they received from the LLC during the year on their individual tax return. LLCs of all kinds that hire employees are responsible for completing and filing the required employment tax forms.
In addition to federal taxes, LLCs in most states must also pay state taxes or some type of annual fee to the state where it is formed.
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