When the time comes to hand the IRS your money, it’s no secret that the byzantine tax code they have created is built for confusion over efficiency. Here are some things every entrepreneur should know about filing taxes for an LLC:

First, unlike a Corporation, an LLC is a pass-through entity – this means that the company itself will not have to pay any federal taxes at the company level. The individual members will pay taxes or any distributions they receive from the LLC. If the LLC has only one member, you will be taxed like a sole proprietorship. This means that you will figure your profits and losses on IRS Form 1040, Schedule C when you file your personal income tax return.

However, if your LLC has multiple members, you will be taxed as a partnership. Each member will report their profits on IRS Form 1040, Schedule E when they file their personal tax return. The partner’s share of profits and losses should be clearly defined on a well-drafted Operating Agreement in order to avoid conflict. In addition, the multi-member LLC must distribute a Schedule K-1 to each member in order to show that member his or her share of LLC income.

Always check with your State’s tax collector for any “franchise taxes.” These are additional state taxes imposed on LLC’s that reach a certain income threshold.

If you are a member of Spiegel & Utrera, P.A.’s General Counsel Club and you need assistance filing your LLC taxes, call (800) 734-9900 or  clubassist@amerilawyer.com for assistance. Remember, as a member of the  General Counsel Club, you receive unlimited legal, business, credit and tax  advice all year long.