How to File Taxes for an LLC for the First Time (2026 Guide)

Key Takeaways

• The IRS doesn’t recognize “LLC” as a tax classification. Your LLC files based on how it’s classified: disregarded entity (Schedule C), partnership (Form 1065), S-Corp (Form 1120-S), or C-Corp (Form 1120).
• Single-member LLCs default to disregarded entity status and file Schedule C with Form 1040 by April 15, 2026. Multi-member LLCs default to partnership status and file Form 1065 by March 17, 2026.
• Self-employment tax (15.3%) catches first-time filers off guard. It’s in addition to your regular income tax.
• Partnership late filing penalties are $220 per partner per month. A 3-member LLC filed 2 months late faces $1,320 in penalties.
• First-year deductions often missed include startup costs (up to $5,000 immediately), home office, mileage, and professional services.

Filing your first LLC tax return feels overwhelming. You formed the business, got your EIN, opened a bank account, and now the IRS wants to hear from you. The problem? There’s no such thing as an “LLC tax return.”

That’s not a typo. The IRS doesn’t recognize “LLC” as a tax classification. Your LLC files based on how it’s classified for tax purposes, and that classification determines everything: which forms you file, when they’re due, and how much you’ll owe.

This guide walks you through exactly what to do. We’ll cover how LLCs are actually taxed, the specific forms and deadlines for 2026, common first-year mistakes that cost real money, and when it makes sense to get professional help.

Quick Answer: Most single-member LLCs file Schedule C with their personal return (Form 1040). Most multi-member LLCs file Form 1065 and issue K-1s to members. Your filing depends on your LLC’s tax classification, not its legal structure.

How LLCs Are Taxed (It’s Not What You Think)

Here’s what trips up most new LLC owners: the IRS doesn’t care that you formed an LLC. They care how your LLC is classified for tax purposes.

When you form an LLC, you get certain legal protections (liability protection, flexible management structure). But for taxes, the IRS puts your LLC into one of four buckets. If you didn’t file any special elections, you’re in the default bucket based on how many members you have.

Let’s break down each classification.

Single-Member LLC (Default: Disregarded Entity)

If you’re the only owner of your LLC and you didn’t file any tax elections, your LLC is a disregarded entity. This means the IRS ignores the LLC for tax purposes and treats you as a sole proprietor.

What this means for your taxes:

• You file Schedule C (Profit or Loss from Business) attached to your personal Form 1040
• All profit from the LLC flows directly to your personal return
• You pay self-employment tax of 15.3% on your net profit (this covers Social Security and Medicare)
• You pay regular income tax on top of that

Example: Sarah started a consulting LLC in March 2025. By December, she had $85,000 in revenue and $15,000 in deductible expenses. Her net profit is $70,000. She’ll report this on Schedule C and owe approximately:

• Self-employment tax: $9,891 (15.3% of 92.35% of net profit)
• Income tax: Varies based on her other income and filing status

The self-employment tax catches many first-time filers off guard. It’s in addition to your regular income tax, and there’s no employer to split it with you.

Multi-Member LLC (Default: Partnership)

If your LLC has two or more owners and you didn’t file any elections, the IRS treats it as a partnership.

What this means for your taxes:

• The LLC files Form 1065 (U.S. Return of Partnership Income)
• The LLC itself doesn’t pay income tax
• Each member receives a Schedule K-1 showing their share of profit or loss
• Members report their K-1 income on their personal returns

The catch: Partnership returns are due March 17, 2026 (for tax year 2025). That’s one month before your personal return. Miss this deadline, and the penalty is $220 per partner per month. A three-member LLC that files two months late faces $1,320 in penalties before you even get to the actual taxes.

For more on partnership taxation, see our complete guide to partnership taxation.

LLC Electing S-Corp Status

Some LLC owners choose to be taxed as an S-Corporation by filing Form 2553. This doesn’t change your legal structure (you’re still an LLC), but it changes how you’re taxed.

Why would you do this?

The main reason is to reduce self-employment tax. With an S-Corp election, you pay yourself a reasonable salary (subject to payroll taxes) and take additional profits as distributions (not subject to self-employment tax).

Example: An LLC with $150,000 in profit could save $10,000+ annually by electing S-Corp status, depending on what constitutes a reasonable salary for the owner’s role.

What this means for your taxes:

• The LLC files Form 1120-S (U.S. Income Tax Return for an S Corporation)
• You must run payroll and pay yourself a reasonable salary
• Profits beyond your salary pass through to your personal return via K-1
• Deadline is March 17, 2026

The S-Corp election isn’t right for everyone. It adds complexity (payroll, additional filings, reasonable compensation documentation) that may not be worth it for smaller LLCs. We’ve written a detailed comparison in our LLC vs. S-Corp guide.

LLC Electing C-Corp Status

This is rare for small LLCs, but it exists. By filing Form 8832, your LLC can be taxed as a C-Corporation.

What this means for your taxes:

• The LLC files Form 1120 (U.S. Corporation Income Tax Return)
• The LLC pays corporate income tax (21% federal rate)
• Any money you take out is taxed again as dividends or salary

Most small business owners avoid this because of the “double taxation” issue. But it can make sense in specific situations, like when you’re planning to raise outside investment or want to retain significant profits in the business.

For more on C-Corp taxation, see our C-Corporation tax guide.

Step-by-Step: Filing Your First LLC Tax Return

Now that you understand the classifications, let’s walk through the actual filing process.

Step 1: Confirm Your LLC’s Tax Classification

Before you do anything else, figure out how your LLC is classified. Check:

• Your formation documents: Did you file anything besides the Articles of Organization?
• Form 8832: Did you file an Entity Classification Election? If so, you chose your classification.
• Form 2553: Did you file an S-Corporation Election? This means you’re taxed as an S-Corp.
• If you filed nothing: You’re using the default classification (disregarded entity for single-member, partnership for multi-member).

Most new LLC owners haven’t filed any elections, so they’re using the default. But it’s worth confirming before you start preparing the wrong return.

Step 2: Gather Your Financial Records

Your tax return is only as accurate as your records. Here’s what you need:

Income documentation:

• Total revenue for the year (from invoices, sales records, or accounting software)
• Any 1099-NEC forms you received (clients who paid you $600+ should send these by January 31)
• 1099-K forms from payment processors (Stripe, PayPal, Square)

Expense documentation:

• Bank statements from your business account
• Credit card statements for business purchases
• Receipts for expenses over $75 (the IRS requires receipts for expenses $75 and above, and we recommend keeping all of them)
• Mileage logs if you use a vehicle for business
• Home office measurements if you work from home

Other documents:

• Your EIN confirmation letter
• Any 1099s you need to issue to contractors you paid $600+
• Prior year tax returns (if this isn’t your first year in business)

If your records are messy, get them organized before tax season starts. Trying to recreate a year’s worth of transactions in March is stressful and error-prone. Our bookkeeping services help clients stay organized year-round.

Step 3: Understand Your Deadlines

Missing deadlines costs real money. Here are the key dates for tax year 2025 (filing in 2026):

Important: An extension gives you more time to file, not more time to pay. If you owe taxes, you need to estimate and pay by the original deadline to avoid interest and penalties.

For a complete deadline breakdown, see our business tax extension deadlines guide.

Step 4: Calculate Your Deductions

Your first year in business often has significant deductible expenses. Don’t leave money on the table.

Common first-year deductions:

• Startup costs: You can deduct up to $5,000 in startup costs in your first year. Amounts over $5,000 are amortized over 15 years. (This includes things like market research, legal fees for formation, and initial advertising.)
• Home office deduction: If you use part of your home exclusively and regularly for business, you can deduct a portion of your housing costs. The simplified method allows $5 per square foot, up to 300 square feet ($1,500 max).
• Business mileage: For 2025 business driving, the IRS standard mileage rate is $0.70 per mile. You need a mileage log showing dates, destinations, business purpose, and miles driven.
• Equipment and supplies: Computers, office furniture, software, and supplies used for business are deductible. Larger purchases may qualify for Section 179 expensing.
• Professional services: Legal and accounting fees for your business are deductible.
• Software and subscriptions: Business software, industry subscriptions, and online tools are deductible.
• Business insurance: Liability insurance, professional insurance, and other business coverage is deductible.

For a comprehensive list, see our small business tax deductions guide.

Step 5: File the Correct Forms

Here’s exactly what to file based on your classification:

Single-Member LLC (Disregarded Entity):

1. Complete Schedule C (Profit or Loss from Business)
   • Part I: Report your gross income
   • Part II: Report your expenses by category
   • The difference is your net profit (or loss)
2. Complete Schedule SE (Self-Employment Tax)
   • This calculates your self-employment tax on the net profit from Schedule C
3. Attach both schedules to your Form 1040
4. Pay any tax owed by April 15

Multi-Member LLC (Partnership):

1. Complete Form 1065 (U.S. Return of Partnership Income)
   • This shows the LLC’s total income, deductions, and various tax items
2. Generate Schedule K-1 for each member
   • This shows each member’s share of income, deductions, and credits
   • The K-1 allocations must match your operating agreement
3. Distribute K-1s to members by the filing deadline (March 17)
4. Members report their K-1 information on their personal returns

For detailed Form 1065 instructions, see our Form 1065 instructions guide.

Step 6: Set Up Estimated Tax Payments (Going Forward)

Here’s something that surprises many first-year LLC owners: you probably should have been paying estimated taxes throughout the year.

If you expect to owe $1,000 or more in taxes, the IRS wants you to pay quarterly. Failing to do so results in underpayment penalties.

2026 estimated tax dates:

• April 15, 2026
• June 16, 2026
• September 15, 2026
• January 15, 2027

Safe harbor rule: You can avoid penalties by paying either:

• 100% of your prior year’s tax liability (110% if your AGI exceeds $150,000), OR
• 90% of your current year’s tax liability

Since this is your first year, you may not have had a prior year liability. Going forward, set up quarterly payments to avoid a big surprise at tax time.

First-Year LLC Tax Mistakes to Avoid

We’ve seen these mistakes repeatedly. They’re all preventable.

Mistake 1: Missing the March 15 Deadline (Multi-Member LLCs)

Partnership returns (Form 1065) and S-Corp returns (Form 1120-S) are due March 17, 2026. That’s a full month before your personal return.

The penalty: $220 per partner (or shareholder) per month, for up to 12 months.

Example: A 4-member LLC that files its Form 1065 three months late faces a penalty of $2,640 ($220 × 4 members × 3 months). That’s before any actual taxes owed.

If you can’t file on time, file an extension. It’s free, and it buys you until September 15.

Mistake 2: Not Separating Personal and Business Expenses

Commingling personal and business funds creates two problems:

1. Audit risk: The IRS may question whether your LLC is a legitimate business or a personal hobby.
2. Missed deductions: When personal and business expenses are mixed, it’s harder to identify and document legitimate business deductions.

The fix: Open a dedicated business bank account and business credit card. Use them only for business expenses. Pay yourself from the business account to your personal account.

This also helps with the legal protection your LLC provides. Mixing funds can “pierce the corporate veil,” putting your personal assets at risk.

Mistake 3: Forgetting Self-Employment Tax

Single-member LLC owners often focus only on income tax and forget about self-employment tax.

The reality: You owe 15.3% of your net profit in self-employment tax. This is the equivalent of both the employer and employee portions of Social Security and Medicare taxes.

On $100,000 of net profit, that’s approximately $14,130 in self-employment tax alone. Income tax is on top of that.

This is why many profitable LLCs consider the S-Corp election. It can significantly reduce self-employment tax for LLCs with consistent profits.

Mistake 4: Missing the S-Corp Election Deadline

If you want your LLC taxed as an S-Corp for 2026, Form 2553 must be filed by March 15, 2026.

Miss this deadline, and you’ll need to request late election relief from the IRS. It’s possible, but not guaranteed, and it adds complexity.

Planning tip: The S-Corp election typically makes sense when your LLC has consistent profits above $50,000-$70,000 annually and you can justify a reasonable salary that’s less than the total profit. Below that threshold, the added complexity often isn’t worth it.

Mistake 5: Not Tracking Basis from Day One

Basis is one of the most overlooked concepts in LLC taxation, and it matters more than most owners realize.

What is basis? It’s essentially your tax investment in the LLC. It starts with what you contributed and changes over time:

• Increases: Additional contributions, share of profits
• Decreases: Distributions, share of losses

Why it matters:

1. You can only deduct losses up to your basis
2. Distributions in excess of basis are taxable
3. When you sell or exit, basis determines your gain or loss

The problem: Many LLC owners don’t track basis until they need it, and by then, recreating years of basis history is difficult and expensive.

The fix: Start tracking now. Keep records of your initial contribution, all additional contributions, all distributions, and your share of profits and losses each year.

For multi-member LLCs, see our partner basis calculation guide.

When Your LLC Needs Professional Help

Not every LLC needs a CPA. Here’s how to decide.

DIY May Work If:

• You have a single-member LLC with straightforward income and expenses
• You don’t have any employees
• You operate in only one state
• Your revenue is under $50,000
• You’re comfortable with tax software and have organized records

Consider a CPA If:

• You have a multi-member LLC. Partnership returns are significantly more complex than Schedule C. Allocations must match your operating agreement, basis must be tracked for each partner, and K-1s must be accurate.
• You’re considering an S-Corp election. The decision involves multiple factors (profit level, reasonable salary, added compliance costs), and doing it wrong can cost more than doing nothing.
• You operate in multiple states. Multi-state filing creates nexus questions, apportionment calculations, and potentially different filing deadlines.
• Your revenue exceeds $100,000. At this level, the potential savings from proper planning typically exceed the cost of professional help.
• You have real estate or rental properties in your LLC. Real estate taxation has its own set of rules around depreciation, passive losses, and more.
• You want to minimize self-employment tax. A CPA can analyze whether an S-Corp election, retirement contributions, or other strategies make sense for your situation.

Our tax preparation services include analysis of optimization opportunities, not just filing what you bring us.

Frequently Asked Questions

Do I need to file a tax return if my LLC made no money?

It depends. Single-member LLCs with no income or expenses don’t need to file Schedule C, though you may still need to file Form 1040. Multi-member LLCs must file Form 1065 even with zero activity. The IRS wants to know your partnership exists.

Can I deduct my startup costs?

Yes. You can deduct up to $5,000 in startup costs in your first year. If your startup costs exceed $5,000, the deductible amount phases out dollar-for-dollar for costs between $5,000 and $50,000. Any amount you can’t deduct immediately gets amortized over 15 years.

What if I formed my LLC in December but had no income?

You may still need to file, especially if you’re a multi-member LLC. The LLC existed for part of the tax year, even if it had no activity. Consult with a CPA to determine your specific filing obligations.

Do I need an EIN to file my LLC taxes?

Single-member LLCs without employees can use your Social Security Number. However, you’ll need an EIN if you:

• Have a multi-member LLC (partnership)
• Have employees
• File excise tax returns
• Have a Keogh plan

Getting an EIN is free and takes minutes on the IRS website. Many LLC owners get one regardless of requirement because it keeps their SSN off business documents.

What records should I keep and for how long?

Keep all receipts, bank statements, contracts, invoices, and tax returns for at least 7 years. The IRS generally has 3 years to audit your return, but this extends to 6 years if you underreport income by more than 25%, and there’s no limit for fraud.

Digital copies are acceptable. Use cloud storage so you don’t lose records to computer failure.

What happens if I file late?

For single-member LLCs, the failure-to-file penalty is typically 5% of unpaid taxes per month, up to 25%. The failure-to-pay penalty is 0.5% per month.

For multi-member LLCs, the penalty is $220 per partner per month, up to 12 months.

Can I change my LLC’s tax classification later?

Yes, but there are rules. You can generally change your election once every 60 months. If you’re a disregarded entity or partnership wanting to elect S-Corp status, file Form 2553 by March 15 of the year you want it effective. Changing from S-Corp back to partnership or disregarded entity is more complex and should be done with professional guidance.

Next Steps

If you’re filing your first LLC tax return, here’s your action plan:

If you’re filing yourself:

1. Confirm your LLC’s tax classification (check what elections you’ve filed)
2. Gather all financial records (income, expenses, receipts, 1099s)
3. Calculate your deductions carefully
4. Use tax software appropriate for your situation
5. File by the deadline (or file an extension if you need more time)
6. Set up estimated tax payments for next year

If you want professional help:

Your first year sets the foundation for everything that follows: your basis, your recordkeeping habits, and potentially your entity structure. Getting it right from the start saves headaches and money later.

If you have a multi-member LLC, are considering an S-Corp election, or simply want someone to analyze your situation for optimization opportunities, we’d be happy to help. Schedule a consultation to discuss your LLC’s tax situation with a CPA who specializes in pass-through entities.