How Does an LLC Pay Taxes: Forms, Deadlines, and Elections

An LLC pays taxes through its owners rather than as a separate taxpayer in most cases. The IRS treats a single-member LLC as part of its owner and a multi-member LLC as a partnership, so profits pass through to the members’ personal returns and get taxed there. Owners can change this by electing to have the LLC taxed as a C-Corporation or S-Corporation. Whichever path applies, LLC owners generally send the IRS money four times a year through estimated tax payments rather than waiting for one annual bill.

How that plays out in forms, deadlines, and dollars depends on which of four tax classifications your LLC falls into. Start there.

How the IRS Classifies Your LLC

The IRS does not have a dedicated tax category for LLCs. It fits your LLC into an existing box based on how many members it has and whether you’ve filed an election to change the default.1Internal Revenue Service. Limited Liability Company (LLC)

A single-member LLC is automatically a “disregarded entity.” The IRS looks through the LLC to the owner. A multi-member LLC is automatically a partnership. Either type can opt out of the default by filing Form 8832 to be taxed as a corporation, and an LLC that wants S-Corporation treatment files Form 2553.2Internal Revenue Service. Form 8832, Entity Classification Election

Your classification determines which return the LLC files, whether the LLC itself owes federal income tax, and how the profits show up on your personal return. Everything below flows from it.

Single-Member LLC: Schedule C on Your Personal Return

If you’re the only owner and haven’t elected corporate treatment, the business’s profit is your income. You report gross receipts and business expenses on Schedule C of your Form 1040, and the net profit flows onto your personal return and is taxed at your individual rate.3Internal Revenue Service. Instructions for Schedule C (Form 1040)

An important point new owners miss: you owe tax on the full net profit whether or not you took the money out of the business account. If the LLC cleared $50,000 in profit and you left $30,000 sitting in the account for equipment, you still report $50,000.4Internal Revenue Service. Single Member Limited Liability Companies

Many single-member LLCs also need an Employer Identification Number. An EIN is required if the LLC has employees or any excise tax liability, and you may need one to open a business bank account even if not.4Internal Revenue Service. Single Member Limited Liability Companies

Multi-Member LLC: Partnership Return and K-1s

An LLC with two or more members defaults to partnership taxation. The partnership itself pays no federal income tax. Instead, the LLC files Form 1065, an informational return showing the company’s total income, deductions, and credits.5Internal Revenue Service. About Form 1065, U.S. Return of Partnership Income From that, the LLC issues a Schedule K-1 to each member showing that member’s share of the profits or losses, and each member reports the K-1 amounts on their personal return.6Internal Revenue Service. Instructions for Form 1065

Your share is set by the operating agreement, not by what actually landed in your bank account. If the agreement gives you a 40% interest and the LLC earned $200,000, you’re taxed on $80,000 even if the LLC distributed nothing that year.

Electing Corporate Tax Status

Pass-through treatment is the default, not the only option. Filing Form 8832 lets you change your LLC’s classification, and the election can take effect up to 75 days before the filing date or up to 12 months after.2Internal Revenue Service. Form 8832, Entity Classification Election Two corporate paths exist.

C-Corporation Status

A C-Corp election makes the LLC pay its own federal income tax at a flat 21% rate on taxable income.7Office of the Law Revision Counsel. 26 U.S. Code 11 – Tax Imposed When the company then distributes profits as dividends, the owners pay a second layer of tax on those dividends at individual rates. Qualified dividends are taxed at capital gains rates of 0%, 15%, or 20%, depending on income.

The double layer often costs small LLCs more, but C-Corp status can suit a business that plans to reinvest most profits or wants a structure outside investors recognize. The 21% corporate rate also sits below the top individual rate, so a business that retains rather than distributes profits may pay less overall tax in the near term.

S-Corporation Status

S-Corp treatment keeps pass-through taxation, so the LLC itself pays no income tax and files Form 1120-S while profits still flow to the owners.8Internal Revenue Service. About Form 1120-S, U.S. Income Tax Return for an S Corporation The draw is self-employment tax. Owner-employees pay themselves a reasonable salary that goes through payroll taxes, and take remaining profits as distributions that are not subject to the 15.3% self-employment tax.

You elect S-Corp status by filing Form 2553 no later than two months and 15 days after the beginning of the tax year the election is meant to take effect. For a calendar-year LLC, that deadline is March 15. Miss it and you generally wait until the following year, though the IRS offers late-election relief in some cases. S-Corps also carry restrictions a regular LLC does not: no more than 100 shareholders, only one class of stock, and every shareholder must be a U.S. citizen or resident.9Office of the Law Revision Counsel. 26 USC 1362 – Election; Revocation; Termination

Self-Employment Tax on Pass-Through Profits

An LLC taxed as a sole proprietorship or partnership triggers self-employment tax on the members’ shares of business profit. This covers Social Security and Medicare contributions that a traditional employer would normally split with an employee. You pay both halves as an owner, for a combined 15.3%.10Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)

The 15.3% breaks into 12.4% for Social Security and 2.9% for Medicare. The Social Security portion applies only to the first $184,500 of net self-employment earnings in 2026.11Social Security Administration. Contribution and Benefit Base Medicare has no cap. If your total earnings exceed $200,000 ($250,000 if married filing jointly), an additional 0.9% Medicare surtax applies to the amount above the threshold.12Internal Revenue Service. Topic No. 560, Additional Medicare Tax

You can deduct half of your self-employment tax on Schedule 1 of your Form 1040. That reduces income tax but not the self-employment tax itself.13Internal Revenue Service. Topic No. 554, Self-Employment Tax

Quarterly Estimated Tax Payments

The federal system is pay-as-you-go. LLC owners have no employer withholding tax from a paycheck, so you send the IRS estimated payments four times a year. The 2026 due dates are:

  • April 15, covering January through March
  • June 15, covering April and May
  • September 15, covering June through August
  • January 15, 2027, covering September through December14Internal Revenue Service. When to Pay Estimated Tax

You avoid the underpayment penalty if your estimated payments and withholding cover at least 90% of the current year’s tax or 100% of last year’s tax. If your prior-year adjusted gross income was over $150,000, the second safe harbor rises to 110% of the prior year’s tax.15Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty You also avoid the penalty if you owe less than $1,000 when you file.

The Electronic Federal Tax Payment System (EFTPS) is the standard way to make these payments. It is a free Treasury service that lets you schedule payments online or by phone from your bank account, and it issues a confirmation number for each payment.16Bureau of the Fiscal Service. Electronic Federal Tax Payment System Keep those confirmations. If the IRS later questions whether you paid on time, that is your proof.

Annual Filing Deadlines by LLC Type

What you file at year-end depends entirely on classification.

Partnership and S-Corp deadlines fall a month before individual returns by design. Members need their K-1s to complete their personal returns. If a multi-member LLC misses the Form 1065 deadline without an extension, the penalty is $255 per member for each month the return is late, up to 12 months.6Internal Revenue Service. Instructions for Form 1065 A five-member LLC three months late owes $3,825.

Penalties for Filing or Paying Late

The IRS treats filing late and paying late as separate problems with separate penalties.

File late without an extension and the penalty is 5% of the unpaid tax for each month the return is overdue, capped at 25%.18Internal Revenue Service. Failure to File Penalty File on time but pay short and the failure-to-pay penalty is 0.5% of the unpaid tax per month, also capped at 25%.19Internal Revenue Service. Failure to Pay Penalty When both apply in the same month, the failure-to-file penalty is reduced by the failure-to-pay amount.

Interest also accrues on any unpaid balance. The rate for individual underpayments was 7% per year, compounded daily, in the first quarter of 2026, and it adjusts each quarter.20Internal Revenue Service. Interest Rates Remain the Same for the First Quarter of 2026 The practical rule: if you can’t pay in full, file on time anyway. The filing penalty is ten times the payment penalty, and the IRS offers installment plans for the balance.

State Taxes Are a Separate Bill

Federal taxes are only part of the picture. Most states impose their own income tax on LLC profits, and the mechanics vary. Some follow the federal pass-through model and tax only the members. Others impose a separate entity-level tax, franchise tax, or annual fee on the LLC itself regardless of profit. State costs range from nothing in some states to several hundred dollars or more per year.

An LLC that does business in multiple states may have filings in each. States use various tests for whether a business has enough connection, called nexus, to require a return. Employees, an office, or significant sales in a state can each create nexus. The federal Interstate Income Act shields some businesses whose only in-state activity is soliciting sales of physical goods, but the protection has limits and does not cover service businesses.

State rules can also change the math on a corporate election. Some states do not recognize the S-Corp election and tax those LLCs as regular corporations. Check your state’s tax authority or a local tax professional before assuming your federal treatment carries over.