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This article contains information about what an LLC is, how it has been classified, and the tax extensions that are applicable for each LLC.
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An Overview of LLC
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 is then reported on their own tax returns. This can result in paying fewer taxes since profits are not taxed at both the business level and the personal level. Another advantage: Owners aren't typically responsible for the company's debts and liabilities.
Classifications of LLC
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.
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
- MultiMember LLC as a partnership
- Multi-Member LLC as a Corporation
Single Member LLC
A single-member LLC, or limited liability company, has only one member. Despite this, it is advantageous to have an operating agreement. The operating agreement describes the operations of the LLC, the formation of the business and the procedures followed by the business. In the absence of an operating agreement, the LLC will be subject to the default rules of the state in which the LLC is organized.
Single Member LLC treated as Sole Proprietorship
Based on current IRS rules, unless the single-member LLC elects to be treated as a corporation, it is generally disregarded for federal tax income purposes, except in the following cases:
- If the only member is an individual and all of their income and expenses from businesses are operated as a single-member LLC it needs to be reported on Form 1040.
Single Member LLC treated as Corporation or Partnership
If the single member is a corporation or partnership and their income and expenses are aggregated with other income and expenses from the corporation or partnership and reported on that entity’s tax return. Form 1065 for partnership, and Form 1120 or 1120-S, for corporation.
Multi-Member LLC is a limited liability company with two or more members. Usually, LLC's are organized under the state rules, and for federal purposes it will be treated as a corporation or partnership.
MultiMember LLC as a partnership
If the MultiMember LLC is a partnership, then the normal partnership tax rules will be applied to the business and it must file Form 1065, U.S Return of Partnership.
Generally, members of an LLC that are filing partnership returns are required to pay self-employment taxes to show their share of any partnership earnings. Additionally, they must also show their pro-rata share of partnership income, credits and deductions on Schedule K-1 of Form 1065.
Multi-Member LLC as a Corporation
If the MultiMember LLC is a corporation, then the normal corporate tax rules will be applied to the business and it must file Form 1120, U.S. Corporation Income Tax Return, the C corporation income tax return. Please note that Form 1120 must be filed by April 15, 2021.
However, if a qualifying LLC business is elected to be an S Corporation, it should file Form 1120S, U.S. Income Tax Return for an S Corporation. Any instructions and all S corporation tax laws will be applicable to the business. Each business owner is required to report their pro-rata share of corporate income, credits, and deductions on Schedule K-1 (Form the 1120S).Please note that Form 1120-S must be filed by March 15, 2021.
Single Member LLC
Tax Extension for Single Member LLC treated as Sole Proprietorship
To apply for an IRS Tax Extension for a Single Member LLC, e-file Form 4868 and receive an extension 6 months to file your original returns. Please note that Form 4868 is due by
April 15, 2021.
Tax Extension for Single Member LLC treated as Corporation or Partnership
To apply for an IRS Tax Extension for a Single Member LLC corporation or partnership, e-file Form 7004 to receive an extension of up to 7 months to file your original returns. Please note that Form 7004 is due by March 15, 2021.
Tax Extension for Multi-Member LLC as a Partnership
To apply for an IRS Tax Extension of Multi-Member LLC partnership, you should e-file Form 7004 to receive an extension of up to 7 months to file your original returns. Please note that Form 7004 is due on Monday,
March 15, 2021.
How to file Extension for LLC?
Get started with ExpressExtension, to file an extension for a LLC. ExpressExtension, is an IRS authorized e-file provider for IRS tax extension Forms 7004, 4868, 8868, and 8809. You can complete filing your extension in minutes, and file from any device. The IRS will process your return quickly and you will be notified instantly once the IRS processes your extension. In case, if your extension got rejected, you will be provided with an explanation to fix it and re-transmit it with the IRS for free.
- Sign up for a free account
- Choose the extension Form you want "7004" or "4868"
- Enter Form Details
- Review Form Summary
- Transmit it to the IRS