Guide to Business Tax for LLCs and Corporations: Ongoing Requirements

Follow Our Corp and LLC Tax Guide to Keep Your Business in Good Standing

If you have already started your business, you may be asking what’s required to keep your doors open. Although we’re not tax professionals, we have put together a list of business tax requirements to help you stay on top of tax returns and other ongoing business obligations.

NOTE: MyCompanyWorks is not an accounting or tax firm and is prohibited from offering tax advice or services. If you have further questions you should consult your tax advisor or call the Internal Revenue Service (IRS) or your state taxation department.

Our Tax and Accounting Partners can answer more complex tax questions.

5 Tax Requirements for LLCs and Corporations

1. Federal Taxes. If you own a business formed in the United States (LLC, Corporation, DBA), you have to file your regular personal tax return (the “1040”) as well as a business tax return (sometimes it’s a separate tax return or simply a “schedule” that is added to your personal tax return). This applies both to US Citizens and non-citizens and is required regardless if you had zero income or not. Forms and Due Dates. The form and due date for your Federal Income Taxes depends on the type of business entity you have. (See below for details)
2. Employment Taxes. If you have employees (or have hired yourself as an employee of your company), then there is a separate category of forms and taxes you must pay. (See below for details)
3. Estimated Taxes. You typically are required to pay estimated taxes quarterly (if you have enough taxable income, see below for details).
4. State Taxes (including Sales Taxes). Depending on which state(s) your company is registered in, you will be subject to various state and local taxes as well. (See below for details)
5. Annual Reports. An Annual Report (which sometimes is actually a state franchise or other tax) updates the state filing department with your current addresses, owners, etc. and is a separate fee and filing from your Federal or State taxes.

*Non-US Citizens – See the next section.

TIP: Taxes are much easier to manage if you set up a proper accounting system and reconcile your books regularly.

4 Business Tax and Other Requirements for Non-US Residents and Non-US Citizens

1. Federal Taxes. Regardless of which state you formed your company in, you will still need to file Federal Taxes as indicated in the sections below. Note that some countries have a separate Tax Treaty with the US so consult with your tax advisor to verify. This guide from Stripe also provides some more detailed information about the sections below if you want to learn more.
2. State Taxes (including Sales Taxes). Depending on which state(s) your company is registered in, you will be subject to various state and local taxes as well. These taxes are in addition to Federal taxes.
3. Annual Reports. An Annual Report (which sometimes is actually a state franchise or other tax) updates the state filing department with your current addresses, owners, etc. and is a separate fee and filing from your Federal or State taxes.
4. FEIN vs ITIN. Your Federal Employer Identification Number (FEIN) is issued by the IRS and is basically the ID # for your company. In addition to the FEIN, Non-US citizens will require an ITIN to submit Federal taxes so you should apply for your ITIN as soon as your company is issued a Federal Employer Identification Number (FEIN).

IMPORTANT: Non-US citizens are required to file taxes on different due dates than citizens. See sections below for specific instructions for non-US citizens. Also, you may be required to pay taxes to your home country, in addition to US taxes, so make sure to check your local laws and consult with your tax advisor.

Federal Taxes for Corporations and LLCs

S-Corporations

S-Corporations file a separate tax return for the business called Form 1120S (due March 15th) and then each shareholder will receive a schedule called “Schedule K-1” that they will then submit with their personal 1040 Tax Return (due April 15th). Note that S-Corporation profit is not taxed separately, instead, the income “passes through” to each individual shareholder (based on their percentage ownership) and then each individual pays income tax on their personal tax return.

• IRS Form to File: 1120S (Instructions)
• Due Date: Every March 15*
• Non-US Citizens: S-Corporations are only allowed to be owned by US Citizens so there is no separate tax forms for non-US citizens.

Recommended Resources: The S-Corporation tax return is fairly long and complex (the instructions alone are 40 pages) so most people choose to use an accountant to file this form. However, the following services can assist:

• TurboTax Business – Like regular TurboTax for your personal 1040 tax return, TurboTax for LLC and Corporate tax solutions will help you self-file Form 1120s for your business. It’s a lot simpler than completing the form on your own, but you should have a fairly good understanding of business taxes. We recommend this option for clients familiar with business taxes or with a new S-Corporation and only a few transactions.
• Cleer Tax & Bookkeeping – This service will have a professional accountant file Form 1120s (and 1 state form, if applicable) and have lower-cost options based on your annual revenue. Note that they can also file your personal tax returns as well. MyCompanyWorks customers receive an automatic discount of $75 when purchasing a return.
• 1-800-Accountant – They provide tax, accounting, bookkeeping, and payroll service for those who prefer a “full-service” solution.

C-Corporations

C-Corporations file a separate tax return for the business called Form 1120 (due April 15th). Note that C-Corporation income is taxed separately, meaning that you will first be taxed on all C-Corporation profits. Each shareholder pays individual income tax on that income – but only if it has been distributed as a dividend (otherwise it remains in the company). If dividends are distributed, each shareholder will receive a form called “1099-DIV” that they will use to prepare their personal 1040 Tax Return (due April 15th).

• IRS Form to File: 1120 (Instructions)
• Due Date: Every April 15**
• Non-US Citizens: In addition to Form 1120, C-Corporations that are owned 25% or more by non-US citizens must also file Form 5472. Finally, non-US citizens are required to file Form 1040-NR (or Form 1040-NR-EZ). See our recommended resources below for assistance.

Recommended Resources: The C-Corporation tax return is fairly long and complex so most people choose to use an accountant to file this form. However, the following services can assist:

• TurboTax Business – Just like regular TurboTax for your personal 1040 tax return, this service will help you self-file Form 1120 for your business. Definitely simpler than doing it yourself but requires a fairly good grasp of business taxes. We recommend this option for clients that are familiar with business taxes or have a new C-Corporation and only a few transactions. Non-US Citizens can file with Sprintax for the 1040-NR but may need to use one of the other firms below for the 5472 or 1120.
• Cleer Tax & Bookkeeping – This service will have a professional accountant file Form 1120 (and 1 state form, if applicable) and have lower-cost options based on your annual revenue. Note that they can also file your personal tax returns and provide services for non-US citizens as well. MyCompanyWorks customers receive an automatic discount of $75 when purchasing a return.
• 1-800-Accountant – They provide tax, accounting, bookkeeping, and payroll service for those who prefer a “full-service” solution.

1-Member LLC (or 1-Person DBA/Sole Proprietorship)

By default, 1-Member LLCs (or DBA/Sole Proprietorships) are considered a “disregarded entity” by the IRS which means there is no tax on the LLC. The owner simply adds any income onto their personal 1040 tax return via Schedule C (due April 15th). LLCs can choose to be taxed like an S-Corporation or C-Corporation (fairly rare) in which case the sections, forms, and deadlines above will apply. An LLC filing as an S Corp may save you money. Ask your CPA or a tax professional to help you decide if an S-Corp election is right for your business.

• IRS Form to File: 1040 with Schedule C (Instructions)
• Due Date: Every April 15
• Non-US Citizens: 1-Member LLCs that are owned by a non-US citizen must file LLC tax form Form 5472 and a “pro forma” Form 1120 (Only indicating the name and address of the foreign-owned LLC, its employer identification number, and the date of formation). In addition, non-US citizens are required to file Form 1040-NR (or Form 1040-NR-EZ). See our recommended resources below for assistance.

Recommended Resources: Schedule C is fairly simple and most people can usually handle the basics when filing their 1040. However, if you are a non-US citizen or would rather not deal with the hassle, the following firms can help file tax for an LLC:

• TurboTax – This service will help you self-file Form 1040 with Schedule C for your business. Non-US Citizens can file with Sprintax for the 1040-NR but may need to use one of the other firms below for form 1120.
• Cleer Tax & Bookkeeping – This service will have a professional accountant file your Schedule C (and 1 state form, if applicable) and have lower-cost options based on your annual revenue. Note that they can also file your personal tax returns and provide services for non-US citizens as well. MyCompanyWorks customers receive an automatic discount of $75 when purchasing a return.
• 1-800-Accountant – They provide tax, accounting, bookkeeping, and payroll service for those who prefer a “full-service” solution.

2 (or more) Member LLC (or DBA/Partnership with 2 or more partners)

By default, 2 (or more) Member LLCs (or DBA/Partnerships) are considered a “disregarded entity” by the IRS which means the business itself doesn’t pay LLC partnership taxes. Instead, the business files an informational tax return called Form 1065 (due March 15th) and each shareholder will receive a form called “Schedule K-1” that they will then submit with their personal 1040 Tax Return (due April 15th). LLCs can choose to be taxed like an S-Corporation or C-Corporation (fairly rare) in which case the sections, forms, and deadlines above will apply.

• IRS Form to File: 1065 (Instructions)
• Due Date: Every March 15*
• Non-US Citizens: Non-US citizens are required to file Form 1040-NR (or Form 1040-NR-EZ). See our recommended resources below for assistance.

Recommended Resources: The Partnership 1065 tax return is fairly long and complex (the instructions alone are 52 pages) so most people choose to use an accountant to file tax for an LLC. However, the following services can assist:

• TurboTax Business – Just like regular TurboTax for your personal 1040 tax return, this service will help you self-file Form 1065 for your business. Definitely simpler than doing it yourself but requires a fairly good grasp of business taxes. We recommend this option for clients that are familiar with business taxes or have a new partnership and only a few transactions. Non-US Citizens can file with Sprintax for the 1040-NR but may need to use one of the other firms below for form 1065.
• Cleer Tax & Bookkeeping – This service will have a professional accountant file your Form 1065 (and 1 state form, if applicable) and have lower-cost options based on your annual revenue. Note that they can also file your personal tax returns and provide services for non-US citizens as well. MyCompanyWorks customers receive an automatic discount of $75 when purchasing a return.
• 1-800-Accountant – They provide tax, accounting, bookkeeping, and payroll service for those who prefer a “full-service” solution.

* or the 15th day of the 3rd month after your fiscal year ends. The vast majority of S-Corporations and Partnerships have a fiscal year that ends on December 31 (you would have had to indicate a different year when obtaining your FEIN to specify anything else).
** or the 15th day of the 4th month after your fiscal year ends. The vast majority  C-Corporations have a fiscal year that ends on December 31 (you would have had to indicate a different year when obtaining your FEIN to specify anything else).

LLC and Corp Employment Taxes

If you have hired an employee (or you have hired yourself as an employee, typically if you are a C or S-Corporation), then there is a separate set of tax forms and due dates that are required.

• Each New Hire Receives Form W-4
• File Form 941 Quarterly OR Form 944 annually if less than $2,500 in taxes for the year.
• File Form 940 Annually
• File Forms W-2 and W-3 Annually
• Various state and local taxes for things like unemployment insurance and workers compensation.

Recommended Resource: Payroll can be so complex that we highly recommend you use a payroll service that will handle all the forms, deadlines and payments mentioned above.

Estimated Federal Taxes

Generally, you are required to pay estimated federal taxes quarterly for your business income if you estimate more than $500 in taxes for the year.

Recommended Resource: The forms in the link above are simple, just make sure you add the deadlines to your calendar and send the payments in on time. If you use an accountant or a firm like 1-800-Accountant they can assist as well.

LLC and Corp State Taxes

Each state where you operate (typically defined as having a physical location or shipping goods from that location) will typically require you to collect and pay various taxes. This can be state income tax, franchise taxes, sales taxes and more (in addition to the state employment taxes mentioned above if you have employees). Generally, you will first register with the state taxation department and they will send you forms or notices of taxes, due dates and more.

Recommended Resources: State taxes can be a bit difficult to initially set up so we recommend you contact your state taxation department directly. After your accounts are set up, it’s just a matter of filing forms and paying taxes on time. However, the following services can assist:

• State Taxation Departments – to verify and apply for various taxes, contact the state taxation department directly. They have phone support, provide forms, and even online registration in many states.
• Business License Compliance Package – our partner Business Licenses, LLC can do all the research and provide all the forms and instructions for setting up your state tax accounts.
• Sales Tax State-Specific Guide – shows the various rates for each state (especially helpful due to the recent Wayfair Supreme Court case). You likely won’t have to register in most states unless you have 6 figures or over a hundred sales there but the rules vary by state so always check with each state or your tax advisor.
• Sales Tax Software – collecting sales tax can be made much easier by using sales tax software.
• 1-800-Accountant – They provide tax, accounting, bookkeeping, and payroll service for those who prefer a “full-service” solution.
• Sales Tax Guide for Amazon FBA – many of our clients are Amazon sellers and this page provides detailed guidance on sales taxes for Amazon FBA.

Consult with a tax professional to prevent missed due dates and costly mistakes. Recommended Vendors offer promotions and discounts for all kinds of business services to MyCompanyWorks clients.

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