Tax Treatment of One-Member LLCs
The IRS treats one-member LLCs as sole proprietorships for tax purposes. As the sole owner of your LLC, you must report all profits (or losses) of the LLC on Schedule C and submit it with your 1040 tax return.
Failure to File Penalty
If you fail to file your taxes on time, you’ll likely encounter a Failure to File Penalty. The penalty for failing to file represents 5% of your unpaid tax liability for each month your return is late, up to 25% of your total unpaid taxes.
LLC Corporate Tax Status
LLCs can choose corporate tax status by making a tax election. To do so, the LLC must file paperwork with the IRS. The LLC will continue operating legally as an LLC even if it chooses corporate tax status for tax purposes.
Use IRS tools to determine if you should file a return. In general, if your income is below a certain level, you may not need to file a personal tax return. However, there are other reasons you may need or want to file, like claiming tax credits.