Filing taxes as an LLC can feel intimidating—especially if it's your first time. But it doesn't have to be.

Whether you're a consultant, contractor, or creative running your own show, understanding how your LLC is taxed will make your life a whole lot easier. From choosing your tax classification to filing the right forms on time, this guide will walk you through what to expect, and how to stay organized and compliant using software like Wave.

We’ll break down the essentials:

• How LLCs are taxed
• What forms are required
• The actionable steps you need to take to stay on top of your taxes

Plus, we'll show you how Wave can simplify the whole process by helping you track income, categorize expenses, and generate tax-ready reports automatically.

Understanding how LLCs are taxed

One of the biggest perks of forming an LLC is tax flexibility. Unlike corporations, LLCs aren't taxed as separate entities by default. Instead, the IRS allows you to choose how your LLC is classified for tax purposes:

• Single-member LLC: Treated as a sole proprietorship (unless you elect otherwise)
• Multi-member LLC: Treated as a partnership (unless you elect otherwise)
• Optional S-corp or C-corp election: You can choose to be taxed as a corporation if it makes sense for your business

Pass-through taxation: What it means for you

Most LLCs use what's called "pass-through taxation." This means the business itself doesn't pay income tax. Instead, profits (or losses) pass through to your personal tax return, where you report and pay taxes on them.

The big advantage? You avoid the double taxation that corporations face, where both the business and the owners pay taxes on the same income.

Self-employment tax: A key consideration

As an LLC owner, you're typically subject to self-employment tax on your share of the profits. This covers Social Security and Medicare contributions—essentially what you'd pay if you were an employee, but now you're covering both the employer and employee portions.

Here's where things get interesting: if you elect S-corp status, you may be able to reduce your self-employment tax burden by paying yourself a reasonable salary and taking the rest as distributions (which aren't subject to self-employment tax). This strategy doesn't work for everyone, but it's worth exploring if your LLC is turning a solid profit.

How Wave helps: Use Wave to track income, categorize expenses, and view your net profit in real time. This gives you an accurate picture of what you'll owe in self-employment taxes, so there are no surprises come tax season.

Step-by-step guide to filing taxes as an LLC

Ready to tackle your LLC taxes? Follow these six steps to stay organized and compliant:

Let's dive into each step.

1. Choose or confirm your LLC's tax classification

First things first: you need to know how your LLC is classified for tax purposes. If you haven't made an election, here's what applies by default:

• Single-member LLC: You're automatically treated as a disregarded entity (sole proprietorship)
• Multi-member LLC: You're automatically treated as a partnership

If you want to change your classification, you'll need to file the appropriate form:

• Form 2553 to elect S-corp status
• Form 8832 to elect C-corp status

Keep in mind that S-corp election has a deadline—typically March 15 for the current tax year. Missing this deadline means you'll have to wait until the following year.

First things first: you need to know how your LLC is classified for tax purposes. If you haven't made an election, here's what applies by default:

• Single-member LLC: You're automatically treated as a disregarded entity (sole proprietorship)
• Multi-member LLC: You're automatically treated as a partnership

If you want to change your classification, you'll need to file the appropriate form:

• Form 2553 to elect S-corp status
• Form 8832 to elect C-corp status

Keep in mind that S-corp election has a deadline—typically March 15 for the current tax year. Missing this deadline means you'll have to wait until the following year.

2. Gather financial records and documents

Before you can file your taxes, you need to round up all the financial documents that tell the story of your business year. This includes:

• Profit and loss statements: Shows your revenue and expenses
• Expense reports: Itemized list of deductible business expenses
• Receipts and invoices: If you worked with contractors or freelancers
• W-9s and 1099s: Proof of income and expenses
• Payroll reports: If you have employees (Forms 940, 941, W-2)

Wave makes this easy: Instead of hunting through shoeboxes and email folders, use Wave to automatically organize your income, expenses, and receipts throughout the year. When tax time rolls around, everything you need is already in one place.

Before you can file your taxes, you need to round up all the financial documents that tell the story of your business year. This includes:

• Profit and loss statements: Shows your revenue and expenses
• Expense reports: Itemized list of deductible business expenses
• Receipts and invoices: If you worked with contractors or freelancers
• W-9s and 1099s: Proof of income and expenses
• Payroll reports: If you have employees (Forms 940, 941, W-2)

Wave makes this easy: Instead of hunting through shoeboxes and email folders, use Wave to automatically organize your income, expenses, and receipts throughout the year. When tax time rolls around, everything you need is already in one place.

3. Complete and submit the right tax forms

The forms you need to file depend on how your LLC is classified. Let's break it down:

Single-member LLC (Default: Sole proprietorship)

• Form 1040 Schedule C: Report your business income and expenses
• Schedule SE: Calculate and pay self-employment tax

You'll file these forms along with your personal tax return (Form 1040).

Multi-member LLC (Default: Partnership)

• Form 1065: Partnership tax return
• Schedule K-1s: Each member receives a K-1 showing their share of income, deductions, and credits to report on their personal return

S-Corp LLC (If you've elected S-corp status)

• Form 1120-S: S-corporation tax return
• Schedule K-1s: Each shareholder receives a K-1
• Payroll reporting: Forms 940, 941, and W-2s if you pay yourself a salary

S-corp status adds complexity, but it can save you money on self-employment taxes if done correctly.

The forms you need to file depend on how your LLC is classified. Let's break it down:

Single-member LLC (Default: Sole proprietorship)

• Form 1040 Schedule C: Report your business income and expenses
• Schedule SE: Calculate and pay self-employment tax

You'll file these forms along with your personal tax return (Form 1040).

Multi-member LLC (Default: Partnership)

• Form 1065: Partnership tax return
• Schedule K-1s: Each member receives a K-1 showing their share of income, deductions, and credits to report on their personal return

S-Corp LLC (If you've elected S-corp status)

• Form 1120-S: S-corporation tax return
• Schedule K-1s: Each shareholder receives a K-1
• Payroll reporting: Forms 940, 941, and W-2s if you pay yourself a salary

S-corp status adds complexity, but it can save you money on self-employment taxes if done correctly.

4. File your state LLC taxes (If applicable)

Don't forget about state taxes. Depending on where your LLC is registered, you may need to file additional state-level returns or pay franchise or excise taxes. Some states with notable requirements include:

• California: Annual franchise tax of $800, plus additional fees based on income
• New York: Filing fees and potential additional taxes depending on your business structure
• Texas: Franchise tax for LLCs with revenue over a certain threshold

Check your state's tax authority website to confirm what's required for your LLC.

Don't forget about state taxes. Depending on where your LLC is registered, you may need to file additional state-level returns or pay franchise or excise taxes. Some states with notable requirements include:

• California: Annual franchise tax of $800, plus additional fees based on income
• New York: Filing fees and potential additional taxes depending on your business structure
• Texas: Franchise tax for LLCs with revenue over a certain threshold

Check your state's tax authority website to confirm what's required for your LLC.

5. Make estimated quarterly payments

If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make estimated quarterly tax payments. These are due four times a year:

• April 15
• June 15
• September 15
• January 15 (of the following year)

Use Form 1040-ES to calculate and submit your estimated payments. Missing these deadlines can result in penalties and interest charges.

Wave helps here too: Track your income and expenses in real time to forecast your quarterly tax liability. Set aside the right amount each quarter so you're never caught off guard.

If you expect to owe $1,000 or more in taxes for the year, the IRS requires you to make estimated quarterly tax payments. These are due four times a year:

• April 15
• June 15
• September 15
• January 15 (of the following year)

Use Form 1040-ES to calculate and submit your estimated payments. Missing these deadlines can result in penalties and interest charges.

Wave helps here too: Track your income and expenses in real time to forecast your quarterly tax liability. Set aside the right amount each quarter so you're never caught off guard.

6. Work with a professional (Optional)

Filing taxes as an LLC can get complicated, especially if you have multiple members, employees, or you've elected S-corp status. If you're feeling overwhelmed, working with a tax professional can give you peace of mind.

Wave Advisors offers two services to help:

• Bookkeeping support: Get an in-house bookkeeper to categorize and reconcile your transactions on a monthly basis, keeping you organized and ready for tax season.‍
• Accounting coaching: Schedule a live 1:1 session with an accounting professional who can walk through your books, provide recommendations, and give you confidence when tax season arrives.

Block Advisors also offers comprehensive tax services for small businesses, including:

• Year-end tax filing readiness: Work with a tax pro to organize documents and identify opportunities for credits and deductions.
• Year-round tax planning services: Get individualized care with check-ins scheduled throughout the year.‍
• Small business tax consulting: Talk with a certified tax pro about your taxes and get personalized help and recommendations.

Common LLC tax filing mistakes to avoid

Even the most organized business owners can slip up when it comes to taxes. Here are some common mistakes to watch out for:

Mixing personal and business expenses

Using your business account for personal purchases (or vice versa) creates a mess at tax time. Keep your finances separate to make categorizing expenses easier and protect your liability protection.

Missing the S-corp election deadline

If you want to be taxed as an S-corp, you need to file Form 2553 by March 15 for the current tax year. Miss this deadline, and you'll have to wait until next year.

Forgetting to file quarterly taxes

Skipping estimated quarterly payments can result in penalties and a big tax bill in April. Set reminders and make it a priority to pay on time.

Failing to issue 1099s or W-2s correctly

If you paid contractors $600 or more during the year, you need to issue them a 1099-NEC. If you have employees, you need to issue W-2s. Missing these forms can result in fines.

Not keeping organized records for deductions

The IRS requires documentation for any deductions you claim. If you can't prove an expense, you can't deduct it. Keep receipts, invoices, and records organized throughout the year!

Wave keeps you audit-ready: Automatically categorize and store all transactions, receipts, and documents in one place. If the IRS ever comes knocking, you'll have everything you need at your fingertips.

How Wave helps LLC owners stay ready for tax time

Tax season doesn't have to be stressful. Here's how Wave make things easier for LLC owners:

Automated bookkeeping

Wave automatically tracks and categorizes your income and expenses, so you always know where your money is going. No more manual spreadsheets or guesswork.

Tax-ready reports

Generate balance sheets, profit and loss statements, and other financial reports with a few clicks. Export your data to share with your CPA or import into tax software.

Receipt and document storage

Store invoices, receipts, and tax forms in one secure place. Wave’s mobile app lets you snap photos of your receipts on-the-go,then attach them to the right transactions!

Estimated tax tracking

Monitor your profit in real time and project your upcoming tax liability with Wave's handy dashboard, designed for small business owners like you. Set aside the right amount for quarterly payments so you're never scrambling!

FAQs about filing taxes as an LLC

Do I need an EIN to file taxes for my LLC?

It depends. Single-member LLCs taxed as sole proprietorships can use the owner's Social Security Number. However, if you have employees, elect S-corp or C-corp status, or have multiple members, you'll need an Employer Identification Number (EIN). Getting an EIN is free and can be done online through the IRS website.

Can I file LLC taxes myself, or do I need a tax preparer?

You can file LLC taxes yourself if your situation is straightforward (single-member LLC with no employees, for example). However, if you have multiple members, employees, or have elected S-corp status, working with a tax professional can help you avoid costly mistakes and maximize deductions.

What happens if I file late or miss a quarterly payment?

Filing late or missing estimated quarterly payments can result in penalties and interest charges. The IRS charges a failure-to-file penalty (5% per month, up to 25% of the unpaid taxes) and a failure-to-pay penalty (0.5% per month). To avoid these penalties, file on time and make your estimated payments by the deadlines.

How do I switch my LLC's tax classification?

To switch from the default classification (sole proprietorship or partnership) to S-corp or C-corp status, you'll need to file the appropriate form with the IRS:

• Form 2553 for S-corp election (due by March 15 for the current tax year)
• Form 8832 for C-corp election (can be filed at any time, but must be done at least 75 days before you want the election to take effect)

Consult with a tax professional before making the switch to ensure it's the right move for your business.

Make LLC tax filing simple and stress-free

Filing taxes as an LLC doesn't have to be overwhelming. With the right tools and a solid understanding of your tax classification, forms, and deadlines, you can stay compliant and even find opportunities to save money.

Here's what to remember:

• LLCs offer flexible tax options that can make your life easier
• Understanding your classification and filing deadlines helps you avoid penalties
• Staying organized with Wave makes tax time easier and less stressful

Whether you're a first-time LLC owner or a seasoned entrepreneur, Wave is here to help you manage your money like a pro. Track your income, categorize expenses, and generate tax-ready reports, all in one intuitive platform designed for small business owners.

Ready to boss your LLC taxes? Sign up for Wave today and see how easy bookkeeping can be.