If you're a business owner, serious investor or new entrepreneur, you absolutely must understand how limited liability company taxes work. Why? Because LLCs both make your accounting easier and provide you with some wonderful tax planning opportunities.
Furthermore, LLC taxes aren't that complicated if you approach the subject with an open mind and a willingness to learn a thing or two about tax law. In fact, you really only need to understand a handful of things to make sense of LLC taxation:
If you're operating a single-member LLC that's treated as a sole proprietorship or an LLC that owns rental properties, you can often do your tax return yourself. (All you need to do is add a Schedule C (for a business) or a Schedule E (for rental property) to your regular 1040 tax return.
If you've elected to have an LLC treated as an S corporation or as a C corporation, you probably should have a knowledgeable tax practitioner (a CPA, an enrolled agent or an attorney) prepare your tax return. Note that my CPA firm specializes in preparing federal and state S corporation tax returns.
