The tax season is here, and if you own an LLC of any magnitude, you must be busy crunching numbers for your tax returns. What date are LLC taxes due in 2023? It depends on the particular type of LLC that you have. (single member, partnership, C-corp, S-corp). You might be more focused on putting all the numbers together, but knowing your taxes’ due dates and deadlines are just as important.
So what date are LLC taxes due? That depends on how you have opted to be taxed as an LLC.
LLCs and Different Tax Structures
First, you must understand that in the eyes of the IRS, LLCs are not separate tax entities. The IRS recognizes four different business entities regarding taxation: Sole Proprietorships, Partnerships, Corporations, and S Corporations. An LLC is constituted as a business structure allowed by state statute. One of the main purposes of forming an LLC is to shield its owners from the legal and financial obligations of the business itself.
For taxation purposes, an LLC usually falls into three different categories.
Single-Member LLC And Taxes
By default, the IRS will treat a single-person LLC as a disregarded entity (similar to a sole proprietorship) for tax purposes. And the responsibility of paying taxes for the LLC “passes-through” to the LLC owner (single member).
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Multi-Member LLC And Taxes
By default, two or more member LLCs will be treated as a partnership. In this case, each partner will be eligible for the profits of the business (and consequently, the taxes) based on their stake in the LLC. Though inactive members can be exempt from this rule, specific stipulations exist.
Default LLC Taxation Structure
If you don’t specify a taxation status while registering as an LLC, you will be taxed as a sole proprietorship or a partnership based on the number of members. Alternatively, you can choose for your LLC to be treated as a corporation by filing Form 8832 (or 2553 for S Corp). In that case, your LLC will be taxed as a corporation whether you are the only member or have multiple members.
There is a further differentiation, as there are two types of corporations: C and S. Whether you are a single-member LLC or a multi-member one, you can choose to either be taxed as a C Corp or an S Corp. An S Corp is a pass-through entity (taxation responsibility will pass through to members). At the same time, a C Corp pays its taxes as a separate legal entity.
When are LLC taxes due?
Now that we have gone over the different taxation structures, let’s look at the important tax deadlines for LLCs for 2023. The IRS’s comprehensive tax calendar for 2023 can help us with that.
What date are LLC taxes due:
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- Single Member LLC (Default Tax identity = disregarded entity): April 18th, 2023.
The owner of a single-member LLC has to file a schedule C (just like sole-proprietorship would) with their personal tax returns. - Multi-Member LLC (Default Tax identity = partnership): March 15th, 2023.
The LLC has to file its taxes by filing Form 1065 with a Schedule K-1 (Similar to a partnership) from each member of the LLC. - LLC registered as C Corp for taxation purposes: April 18th, 2023.
The owner(s) of a C Corp LLC has to file Form 1120, to pay the corporation’s taxes. As a C Corporation, the LLC is considered a taxable entity, separate from its owner(s), which is liable for its taxes. The individual members will file a schedule K-1, with their own tax returns. - LLC registered as S Corp for taxation purposes: March 15th, 2023.
As an S Corp, the LLC’s owner(s)/members will file Form 1120S, and all members will file schedule K-1.
- Single Member LLC (Default Tax identity = disregarded entity): April 18th, 2023.
Quarterly payments
Whether it’s a single or multi-member LLC, the members are not considered employees of the company. They are considered owners (for single-member LLC/sole proprietorship) or partners (multi-member LLC). Only when an LLC turns into a corporation can members or sole owners be considered employees of the entity. Either way, the IRS will expect you to pay the taxes quarterly. But the minimum requirements are different for every LLC structure.
If you are a single-member LLC taxed as the disregarded entity, a multi-member LLC taxed as a partnership, or an LLC taxed as S-Corp, you will owe quarterly taxes. But only if your overall tax returns for the year are expected to exceed $1,000 after subtracting your withholding and refundable credits. Though, there are exceptions to this rule. This is classified as estimated taxes. For example, Stephanie has a single-member LLC that is expected to earn $30,000 this year. If she deducts $5,000 for business expenses, her total taxable income will be $25,000 from the business. That’s the amount her estimated LLC tax will be calculated on. Suppose she expects to pay about $3,500 in taxes, which exceeds the threshold of $1,000. Therefore, she has to make estimated payments every quarter.
But if you are taxed as a C-Corp, whether a single-member or multi-member LLC, you will owe quarterly taxes if your tax returns are expected to reach $500.
The quarterly dates are:
- 1Q — April 18, 2023.
- 2Q — June 15, 2023.
- 3Q — September 15, 2023.
- 4Q — January 15, 2024.
Are there any extensions?
Yes. IRS does allow you to request an extension and file your taxes at a later date. It’s a good idea to know when LLC taxes are due with the extension. But you must understand that filing and paying taxes are two different things. You must pay your LLC taxes by March 16 or April 15 this year. The IRS dictates: Pay what you estimate you owe in tax to avoid penalties and interest.
A single-member LLC is treated as a disregarded entity for tax purposes and can request an extension using Form 4868. If you are a multi-member LLC treated as a partnership or a single or multi-member LLC filing as a corporation, you can request the extension by filing Form 7004.
Even when you have to comply with the deadlines and pay estimated taxes, applying for an extension through the online form is still a good idea as early as possible. This will earn you more time to straighten up your deductibles. The standard extension period is six months, and you may apply for an additional extension in some cases. The extended dates for 2023 are:
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- Single Member LLC (Default Tax identity = disregarded entity): October 15, 2023.
- Multi-Member LLC (Default Tax identity = partnership): September 15, 2023.
- LLC registered as C Corp for taxation purposes: October 15, 2023.
- LLC registered as S Corp for taxation purposes: September 15, 2023.
Are These Dates Same Every Year?
Yes. The tax dates are the same every year unless a particular date falls on a weekend or a public holiday. In that case, the deadline date is shifted to the next business day.
Conclusion
Understanding when tax payments are due and when you must file your tax returns should allow you to plan your financials accordingly. Some of the things that the IRS penalizes an LLC on are:
- Failure to file the taxes on time,
- failure to pay the amounts filed on your returns,
- paying insufficient estimated taxes
- dishonored cheques
The penalties are different for different situations. And the amounts that need to be paid as a penalty are compounded every month (but there are limits to that as well).
The LLC taxation structure you choose is also very important. Make sure you weigh the pros and cons of different structures and make an informed decision based on the nature of your business activity.
