Important Details to Know About Limited Liability Company Taxes in Anaheim

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A limited liability company or LLC, as they are more commonly referred to, are not separate tax entities as with a large corporation. The IRS considers them to be more like a sole proprietorship owned by one person or a partnership, which is owned by two people.

With the LLC, sole proprietorship, and the partnership business structures, the people who own the companies report their income and information on their personal tax returns. An LLC would not pay federal income taxes, although there are a few states that charge state taxes on a limited liability company.

A limited liability company does not have to pay taxes as a business and will not be needed to file a tax return with the Internal Revenue Service.

Learn more about limited liability company taxes in Anaheim.

As the owner of the limited liability company, the IRS does require the owner to report all profits and losses on tax form Schedule C and include it with a 1040 tax return. If the owner has money in the business bank account at the end of the prior year, the owner handles paying taxes on that revenue.

If a limited liability company taxes in Anaheim has more than one owner, they are owners in a partnership for the IRS’ tax purposes. The owners of the LLC will each pay taxes on their legal shares of business income. So, if owners split the profits three ways and add them to their business bank accounts, they will need to pay taxes on their shares of the profits.

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