First of all, congratulations! You’ve taken a big step in your journey when you officially incorporate your entity. Make sure that you keep all the important documents such as your Articles of Incorporation, your EIN documentation, and bank statements as they can come in handy in many applications.
The only difference between a Single Member LLC and a Multi member is as the name implies, a Single Member only has 1 owner, and multi member has 2+. For such a slight difference, it causes a big difference when you are filing your taxes. The most important thing to note is that the due date for Single Member LLCs is April 15, while Multi Member LLCs are March 15.
Federal Filing for Single Member LLCs:
There are typically 2 necessary forms that need to be sent when you are filing your federal taxes: form 5472 and form 1120. Each one serves a unique purpose, one being informational and the other containing your financial performance for the year, but must be sent in conjunction with the other.
See our post about the form 5472 for more information
Federal Filing for Multi Member LLCs:
Multi Member LLC returns contain 2 forms as well, but they differ from the 5472 and 1120 necessary for a Single Member LLC. The two forms needed for a Multi Member LLC are a 1065, as well as a schedule K-1.
A 1065 is used to file an information return to report the company’s income, gains, losses, deductions, credits, etc. while the Schedule K-1 is used to report the individual owner’s share of the partnership's income, deductions, credits, etc.
The important thing to note about being an LLC is each will be considered a “pass through entity” by the IRS. This means the company does not pay tax on its income but "passes through" any profits or losses to its owners.
Owner’s must include the company items on their tax or information returns in the place they actually pay taxes. This means that if you make $5,000 from a day job, and your LLC makes you $5,000, then you will be taxed as if you made $10,000.
If you have a partner and you both own 50% of the company, then the $5,000 the LLC made would be split 50/50 and you would recognize $7,500 ($5,000 + $2,500 as your half of the LLC income) as your individual taxable income in the place you pay taxes.
The last tax obligation for all companies is your state tax. For most, your company will be incorporated in Delaware, Wyoming, or Florida which means you only have a Franchise Fee each year. This means once a year, you have to pay the state a flat fee to remain in good standing, and this can be done online in less than 10 minutes.
If you are outside of these states, you may need to file a complete State Tax return which will be similar (but not the same) to your federal filing. Bookmate only does Federal filings, and does not assist in state returns.
Next steps?
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