How to Prepare and File Small Business and LLC Taxes

It's important to know how to file your small business and LLC taxes if you will handle tax preparation for your operations. While there is some commonality in terms of the basic tax preparation process and filing protocols regardless of entity type, it's crucial to have a firm grasp of your business's tax responsibilities from end to end, from common considerations to the more obscure tax issues you'll need to account for.

Use this article to learn how to prepare and file your LLC and small business taxes. Key takeaways include: 

• Businesses formed as LLCs usually file Schedule C and IRS Form 1040

• Partnerships will file annual partnership tax returns using IRS Form 1065

• S corporations pass-through business income to owners with Schedule K-1

• To be taxed as a C corporation, you must file Form 8832

How to Prepare and File Taxes for Small Businesses

The tax preparation process is generally the same for each small business type. You'll need to:

• Determine which IRS forms to file

• Be aware of applicable filing deadlines for your business type

• Gather your business expenses and taxable income

If you file a business tax extension request before your tax return due date, you’ll get an extra six months to file. Your extension period might vary, depending on your facts.Note that your tax extension allows additional time to file your return, not extra time to pay. You can avoid interest or underpayment penalties by paying your entire tax liability by or before your original tax filing deadline.

Determine when taxes are due

Depending on your entity type, you'll file business taxes by the 15th day of the third or fourth month of the year unless that day falls on a holiday or weekend. The following dates apply to businesses that follow the calendar year. 

• Submit taxes for your partnership or S corporation by March 17, 2025 

• Submit taxes for your C corporation by April 15, 2025

LLCs and other entity types feature pass-through taxation, meaning businesses distribute profits and losses to their owners, who then pay personal income tax on their share of business activity. For 2025, the deadline for filing your personal income tax return is April 15.

Most small business owners, entrepreneurs, and self-employed individuals earning above a predefined income threshold must pay federal estimated quarterly taxes. Filing dates for the 2025 tax year include: 

• April 15

• June 16

• September 15

• January 15 (2026) 

Prepare taxes according to your business entity

The entity your business is formed as dictates when and how you'll prepare and submit your business income tax return. Refer to your business classification below for more information about how and what to do to prepare and file your business income tax return. 

How to File Business Taxes for LLCs

We typically recommend forming your business as an LLC due to its numerous advantages to small business entrepreneurs. LLC owners enjoy simplicity and flexibility in tax filing and protecting their personal assets, shielding them from business liabilities.

LLCs have no separate federal tax process, so the IRS does not recognize them as a business category. This means every LLC can effectively choose which approach to follow for its federal income tax. LLCs can use IRS Form 8832 and elect to classify themselves as sole proprietorships, partnerships, S corporations, or C corporations.Regardless of entity type, you can submit your tax forms electronically via IRS Free File or traditional mail. 

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Single-member LLCs

If your LLC has one owner (called a member), it is treated as a "disregarded entity" by the IRS. Like operating as a sole proprietor, this means there's no separation between you and your business, although LLCs provide personal asset protection and other benefits sole proprietorships do not.

After you've gathered pertinent materials, prepare your taxes using IRS Form 1040, U.S. Individual Income Tax Return. You may also need to prepare and submit relevant schedule forms that aid in calculating and providing additional details about your income.

Common schedules LLC owners may need to prepare include Schedule C (Form 1040), Profit or Loss from Business, and Schedule E (Form 1040), Supplemental Income and Loss. You can review additional schedules you may need for your business here. 

LLCs as partnerships

If your domestic LLC has at least two members (sometimes called a multi-member LLC), the IRS will treat your business as a partnership by default.

Prepare and file IRS Form 1065, U.S. Return of Partnership Income, to report your business's income, gains, and losses, among other details. Each member will also use Schedule K-1 (1065), Partner’s Share of Income, Deductions, Credits, etc., to report their share of income, credits, tax credits, and deductions.

Because LLCs are pass-through entities, profits and losses are handled on each owner's personal income tax return. 

LLCs as S corporations

Your LLC can elect to be taxed as an S corporation, which provides personal asset protection and features pass-through taxation.

Your business should file IRS Form 1120-S, U.S. Income Tax Return for an S Corporation, to report your gains, loss, deductions, and other pertinent information for the period. Each member will report their share via Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc. 

LLCs as C corporations

If you form your LLC as a C corporation, you lose pass-through taxation and are subject to double taxation. C corporations are typically larger businesses, although qualifying businesses of any size can convert.Use IRS Form 1120, U.S. Corporation Income Tax Return, to report gains, losses, and income and to calculate your tax liability. 

Pass-through taxation and LLCs

Personal asset protection and pass-through taxation are popular features for many LLCs. When a business entity, including sole proprietorships, partnerships, and S corporations, features pass-through taxation, income is not taxed at the level of the business or corporation.Instead, it is passed through to be taxed at each owner's individual taxpayer level.

How to File Business Taxes for Sole Proprietorship

Sole proprietors are taxed at the personal income tax level and will prepare and file their individual tax returns with IRS Form 1040. They will also complete and attach Schedule C to report profits and losses from their business.The tax preparation and filing process is similar to what single-member LLC owners are responsible for. 

How to File Business Taxes for Partnerships

While general partnerships must file an annual information return for informational purposes detailing income, gains, deductions, and other details, it won't pay taxes on that income.Instead, income is passed through to each owner to address on their personal income tax returns. 

How to File Business Taxes for Corporations

S corporations

S corps should file IRS Form 1120-S, U.S. Income Tax Return for an S Corporation, to report gains, losses, deductions, and other information.Each owner reports their share via Schedule K-1 (Form 1120-S), Shareholder’s Share of Income, Deductions, Credits, etc.

C corporations

Use IRS Form 1120, U.S. Corporation Income Tax Return, to report gains, losses, and income and to calculate your tax liability.The federal tax rate for C corps is 21% in addition to the individual tax rates applied to each shareholder. 

How Much Does a Business Have to Make to File a Tax Return?

The amount a business must earn to file taxes depends on its type. C corporations must report their income whenever they make a profit. However, if the C corporation does not make a profit but a loss, the shareholder will owe money.

Business owners operating as partners in a partnership, members of an LLC, shareholders within an S corp, or sole proprietors will have more things to consider. Your business may qualify for tax breaks after determining how much it may owe.

What Is the Current Business Tax Rate?

The business tax rate for 2025 will depend on your business type and include the following:

• C corporations have a federal tax rate of 21% (at the entity level). This amount does not include the tax rate individual shareholders will pay for their respective earnings. 

• Limited liability companies, partnerships, S corporations, and sole proprietorships have tax rates ranging from 10% to 37%. The amount varies based on the pass-through income dispersed to members, partners, and shareholders.

Do I Have to Pay State and Local Taxes for My Business?

Several factors, including the business structure you select to be taxed as will dictate whether you'll be responsible for paying state and local business taxes. Review the following information to determine whether state and local taxes are applicable to your small business. 

State income taxes

Whether your business is taxed as a corporation, LLC, or sole proprietor, you may have to pay state taxes depending on the region. There are at least two common state and local taxes that business owners must pay: 

• Employment tax 

• Income tax

Employment taxes include temporary disability insurance, unemployment insurance taxes, and workers' compensation insurance.

Property taxes

If you own your offices or the property you conduct business on, you must pay property taxes to local tax officials. In some cases, only the real estate in which your business operates is taxed. In other cases, the real estate and property used by your business are taxed.

This is usually in the city or county where you conduct business. The tax itself is based on assessed value. You will receive information about the assessed value of your property annually.If you disagree with the assessed value, many localities will allow you to submit an appeal.  

Sales tax

Typically, small business owners must pay and report state sales taxes to businesses they work with that operate in states with state income taxes.

In most states, business owners collect sales tax and pay it to the state Department of Revenue. Online business owners may also be responsible for paying sales tax for certain types of sellers.

Work With the Professionals

Preparing and filing your business taxes to maintain compliance and minimize tax liability is among the most important things you can do. However, as your business matures and grows, you will have fewer opportunities to address this complex work fully. That's why many small business owners and entrepreneurs trust the tax professionals at 1-800Accountant, America’s leading virtual accounting firm, to address their LLC tax filings.

Whether you need business tax preparation for LLCs, tax advisory, or any of our professional accounting services, we have affordable, tax-deductible solutions to maximize your business tax savings. Schedule a quick consultation–usually 30 minutes or less—to learn more.