By Lane V. Erickson, Idaho Business Attorney
If you are reading this article it’s because you either have already begun an LLC or you are considering doing so. If this is the case, congratulations! You are either embarking on or are considering starting a journey as a business owner that could greatly enrich and benefit your life.
At the Racine law office, our premier team of Idaho business attorneys, have assisted clients such as you in the creation, organization, and operation of small businesses and LLCs for over 70 years. We have helped our clients with all aspects of their businesses, and in a wide range of business sectors. Our team, which consists of partners Lane Erickson and TJ Budge, and attorneys Nate Palmer and Dave Bagley are skilled, knowledgeable, and experience in assisting clients with all of their business needs including tax related issues. We have the ability to help you move your business forward by guiding you through and helping you with your business issues.
The purpose of this article is to answer the simple question of do I have to file separate taxes for my Idaho LLC? As you can imagine, the answer to this question is much more complicated than a simple yes or no. As lawyers famously known to answer, it depends. Essentially, the answer really depends on the circumstances and situation of your LLC. To help you answer this question we will first talk about how you were LLC is made up, which really means whether your LLC is A single member or a multi-member LLC. We will then talk about what the filing requirements are for each of these entities. Finally, we’ll talk about the deadlines associated with filing tax documents for your LLC.
Keep in mind that this article is not designed to be exhaustive. If you have questions or concerns, we strongly suggest that you speak with an attorney, and also with a qualified and experienced CPA or tax preparer so that you will know what to do in your specific circumstances.
Single Member LLCTypically speaking a single member LLC is considered by the IRS to be a disregarded entity. This is a fancy legal term that simply means that even though it is a separate entity, it is really only considered to be an extension of the individual themselves. As a result of this, normally a single member LLC does not have a separate IRS EIN (Employer Identification Number) which most people refer to as the tax ID number.
When there is no separate tax ID number, The LLC does not need to file its own tax documents. Rather, the tax documents that need to be filed are a simple Schedule C form for the individual owner. Schedule C is the same form that is used when a person operates without an entity. It’s a simple form that allows the individual to State the profit or loss for the business that is then applied to the personal income of the individual on their own individual tax documents.
Multi-Member LLCHowever, when we are dealing with a multi-member LLC, things are a little bit different. In this instance, the multi member LLC is required to get an IRS EIN. This tax ID number acts pretty much like the “social security number” for the business itself. When a separate tax ID number exists for the LLC then there are different tax documents that must be filed.
The most common tax document that must be filed by the multi-member LLC is the form 1065. To this, there may be additional schedules that are attached for purposes of calculating depreciation, profits and losses, and other similar things. Furthermore, a schedule K-1 will also needs to be prepared and issued to each of the members of the multi-member LLC so each person can individually report the portion of the profits and losses of the LLC on their own personal tax filings.
Deadline for Filing LLC Tax DocumentsThe deadlines associated with when tax documents must be filed also depends on whether we are dealing with a single member LLC or a multi-member LLC. A single member LLC, because it is a disregarded entity, must simply comply with the regular April 15th deadline that individuals are normally required to file by. However, a multi-member LLC has an earlier deadline. This deadline is March 15th.
Again, the purpose of this article is not to be exhaustive as a resource concerning tax filings for LLCs. If you have questions about the type of entity that you are operating, or the types of tax documents or deadlines associated with your identity, we encourage you to contact us. We have helped numerous business clients with these types of issues, and we are confident that we can help you too.
Enlist an Idaho Business Attorney to Help YouOur team of Idaho business lawyers can help you with any of your business structure or operation needs. Whether you are seeking to create a new business or review a current business, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877.232.6101 or 208.232.6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho business problems.