Home Business Tax Savings

Home Business Tax Savings About Home Business Tax Savings Tax Reduction Products Home Based Business Contact Home Business Tax Savings  
Home Based Business
Tax Reduction

If you are self-employed and live in the United States or Canada, you can probably reduce your taxes with a small business run with an honest expectation of profit and where your expenses are ordinary, necessary, and reasonable for that business. It's that simple. Find out How to Reduce Your Taxes
Tax Links Tax Savings
Single and Multi Owner LLC Taxes

LLC owners must report their business income and losses on their personal income tax returns

Similar to a sole proprietorship or partnership you must report your income to the IRS. An LLC is not a separate tax entity like a corporation. The IRS considers Limited Liability Company a pass through entity." Earnings are taxed only once. Profits and losses of the LLC pass through the business to the LLC owners. Owners (members) must then report this information on their personal tax returns. The good news is the LLC itself does not pay federal income taxes. But some states do charge LLCs an annual state tax.

Income taxes and the number of members in your LLC

The number of members in your limited liability company determines how it is taxed by the IRS.

Single-Owner Limited Liability Company Taxes:

If you are the sole owner of your LLC then the IRS taxes you much the same as it would a sole proprietorship. All profits and losses must be reported on your 1040 tax return (on the Schedule C attachment). You can not avoid taxes by leaving your money in the LLCs bank account. All profits in the LLCs accounts must be reported.

Multi-owner Limited Liability Company Taxes:

If there is more than one member of your LLC the IRS taxes you much the same as it would a partnership. Again the LLC itself does not pay tax on profits. Individual members must report their share of profits on Schedule E and attach it to their 1040 form. Each member pays taxes on their distributive share of company profits, as stated in the LLC operating agreement. Again, the LLC itself is not taxed by the IRS although there may be an annual state tax, depending on which state you are in.

State Taxation of Limited Liability Companies:

Although the IRS does not tax LLCs, California levies an annual minimun franchise tax of $800.00, they expect this payment within three months of forming your LLC and kindly send you a bill so you dont forget. Wyoming levies an annual State tax on of $100.00; California requires an annual List of Officers or Members filing, fee of $100.00; Delaware levies an annual franchise tax of $30.00.

Article written by Dennis Gardner
About the Author: Dennis Gardener is an assistant editor at small-business-assistance.

More small business information YOU CAN USE, available at small-business-assistance

Tax Reduction Strategies
"Home Business Tax Savings Made Easy!"

The ONLY plain English guide to home-based business tax deductions authorized by Congress.

Read More
THE ULTIMATE Tax-Reduction System For Small and Home Based Businesses!

Follow Me on Twitter

Get the Biggest Refund you deserve
Maximize your Tax Deductions
with TurboTax

Copyright ® 2013 TaxSaverOnline.com
Home     About Us     Home Business    Tax Savings     Newsletter    Tax Articles    Blog