You might be unsure about how to submit taxes for your firm if you belong to a professional limited liability company (PLLC). A PLLC, as opposed to a conventional LLC, is created especially for licensed professionals like doctors, lawyers, and accountants. Because of this, the tax filing procedure for a PLLC could differ slightly from that of a typical LLC. We’ll give you a step-by-step tutorial on how to file taxes for your PLLC in this article.
Determine your tax classification before you may file taxes for your PLLC. A PLLC with just one member is automatically regarded as a single proprietorship for taxation purposes. This means that Schedule C (Form 1040) of the member’s personal tax return must include information about the PLLC’s income and costs. For tax reasons, the PLLC is regarded as a partnership if it has more than one member.
A PLLC may, however, choose to be taxed as a corporation by submitting Form 8832 to the IRS. If the PLLC want to benefit from specific tax advantages, such as the corporate tax rate or the ability to deduct employee perks, this could be advantageous. Remember that choosing to be taxed as a corporation may also subject the PLLC to double taxation, where the business and its members are both liable to taxes on the same revenue.
Step 2: Compile Your Financial Documents You must gather your financial documents after determining your tax categorization. This covers all of your PLLC’s earnings and outgoings for the fiscal year. Additionally, you might need to acquire any tax-related paperwork or papers, such as Form 1099s or W-2s if you have employees.
Depending on how you are taxed, you may need to file particular tax forms. You must include Schedule C (Form 1040) with your personal tax return if your PLLC is regarded as a sole proprietorship. If your PLLC is regarded as a partnership, you must submit Form 1065, which details the income, credits, and deductions of the partnership. A Schedule K-1 (Form 1065) will be provided to each partner detailing their portion of the partnership’s earnings, credits, and deductions.
If your PLLC chose to be taxed as a corporation, you must submit Form 1120, which summarizes the firm’s earnings and allows you to claim its credits and deductions. The business must also provide W-2s and 1099s to its workers and contractors.
After completing your tax forms, you must submit them to the IRS. Your tax filing status and the kind of tax form you are filing will determine the precise filing deadline. Typically, partnership tax filings must be submitted by March 15th, while corporation tax returns must be submitted by April 15th. Additionally, April 15th is when personal tax returns must be submitted.
A single member LLC is permitted to elect a president. A single member LLC is unable to have a president because there is only one person in charge of running the company. However, the sole member has the option to designate themselves as the LLC’s manager, a position that is comparable to that of the president in a corporation. In this scenario, a single member would be in charge of making all significant business-related decisions.
An LLC’s one member is referred to as its “single member.” This is so because the LLC has just one owner who is in charge of running the company. A single member LLC is not held personally accountable for the LLC’s debts or obligations because it is treated as a different legal entity from its owner.
If you need to complete a W-9 form as a PLLC, you should adhere to the same procedures as any other business company. A vendor or contractor can be asked for a taxpayer identification number (TIN) using the W-9 form. You must include the legal name, address, and TIN of your PLLC on the form. You must also specify the tax status of your PLLC, which is commonly “partnership” or “corporation.”
Independent contractors or vendors who have been paid $600 or more throughout the tax year often obtain a Form 1099. The contractor’s or vendor’s earnings from the company are disclosed on this form. But not every payment necessitates a Form 1099. For instance, a Form 1099 is typically not required for payments made to businesses, even PLLCs that have chosen to be taxed as corporations.
Due to their status as professional corporations (PCs), which are not regarded as independent contractors or self-employed people, they typically do not obtain 1099 forms. Instead, they are treated as independent legal companies that must file their own tax filings, much like a conventional corporation. However, if the PC works for another company as an independent contractor, that company can issue a 1099 to the PC.