Immediately after you create a Limited Liability Company, or LLC, the IRS automatically treats your business as a partnership, but only for income tax purposes. LLCs that are subject to the partnership tax rules are not responsible for actually paying the tax on business earnings, but are responsible for preparing annual partnership tax returns on IRS Form 1065. However, if you are the sole owner of the LLC, then you must pay tax on business profits as if you were a sole proprietor. If you prefer the tax filing rules of a corporation, then you have the option to elect corporate tax treatment by filing IRS Form 8832 or Form 2553 to be taxed as an S Corporation. As a result, the business is solely responsible for reporting all income and deductions on Form 1120 or 1120S each year and paying the appropriate income tax by the deadline. Keep in mind, once you make this election, you cannot change the LLC designation again for five years.
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For more information on small business taxes, contact a Nevada Corporate Headquarters representative at 1-800-508-1729.