Tax Extension for an LLC

A Limited Liability Company, or LLC, is becoming one of the more desirable forms of business in the United States due to their flexibility and “Pass Through” status. There are many different types of LLCs and some have the option to choose what type of tax structure they prefer. As far as IRS Tax Extensions are concerned, there are 3 primary types of LLCs:
  • Single-Member LLC: The IRS considers a Single Member LLC to be a “Disregarded Entity.” this means that the activities of the LLC should be reflected on the owner’s tax return. To File an IRS Tax Extension for a Single Member LLC, you need to use the IRS Form 4868 because it is viewed by the IRS as a Personal Tax Extension
  • Multi-Member LLC: If an LLC has multiple owners, the IRS treats the business as a Partnership unless it has elected otherwise. In this case, a Multi-Member can e-File an IRS Form 7004 to receive an additional 5-6 months of time to file their tax return.
  • Multi-Member LLC as a Corporation: An LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and elects to be treated as a corporation. A Multi-Member LLC as a Corporation can receive a 6 Month Tax Extension by E-Filing IRS Form 7004.
One of the primary advantages of forming an LLC is pass-through taxation. This means that profits & losses “pass through” the business to the individual members who own the business. This information would then be reported on their own tax returns. This can result in paying less taxes since profits are not taxed at both the business level and the personal level. Another plus: Owners aren’t usually responsible for the company’s debts and liabilities.

There is no limit to the number of members that an LLC can have, and there are some types of businesses that cannot become an LLC such as banks and insurance companies. Before deciding to form an LLC, it is best to consult with a lawyer and review the requirements for your state as well as the federal tax regulations for further information.