A Montana LLC’s taxes must be paid promptly so they are compliant with state and federal laws.
Whether it is single-member or multi-member, every LLC has different IRS tax filing rules, so understanding the requirements is crucial.
In this article, we will discuss the process of IRS tax return filing for Montana LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
Understanding Montana LLC Taxation
Montana does not tax LLCs at the state level. In addition, Montana does not charge an LLC franchise tax. The LLC taxes depend on its federal classification.
Single-member LLC: Formerly detailed as a disregarded entity are some single-member LLCs. They do not need a federal tax return; instead file their business income under individual taxes with a 1040 return through the Schedule C Form.
Multi-member LLC: Requires default treated as a partnership status with the 1065 form for federal tax return. Each member receives a Schedule K-1 for income distribution.
LLC electing corporate taxation: Additional IRS filings are needed if your LLC opts to be identified as a taxed S Corporation or C Corporation.
Federal Tax Filing Requirements for Montana LLCs
A. Single Member LLC Taxes
Profits and losses from a single-member LLC are assigned to the owner and it is considered a pass-through entity. The IRS mandates the following documents:
- Form 1040 (US Individual Income Tax Return)
- Schedule C (Profit or Loss from Business)
- Schedule SE (Self-Employment Tax) if applicable
- Estimate tax payments on Form 1040-ES for self-employment income.
B. Multi-Member LLCs’ Tax Obligations
If your Montana LLC is comprised of several members, then it is considered a partnership for tax purposes. The IRS requires:
- Form 1065 (US Return of Partnership Income)
- Schedule K-1 for each member so that each member can declare their portion of income and losses for tax purposes.
- Quarterly estimated tax payments for self-employment tax liability for self-employed members
C. Montana LLCs Taxed as Corporations
LLCs have the option to be taxed as corporations and do so by filing:
- Form 8832 makes an Entity Classification Election to be treated as a C Corporation for tax purposes.
- C Corps file Form 1120 for U.S. Corporation Income Tax Return
- S Corporations file Form 2553 to elect to be treated as an S Corporation for tax purposes.
- Form 1120-S is filed for a U.S. Income Tax return for an S Corporation.
Montana State Tax Obligations
A. State Business Taxes
While there is no sales tax in Montana, LLCs may file under the state business income tax depending on how they are organized:
- Pass-through entities (LLCs taxed as sole proprietorships or partnerships) do not have to pay any Montana business income tax.
- Montana LLCs taxed as corporations need to pay the Montana corporate income tax using Form CLT-4.
B. Employer Taxes
- Paying state payroll taxes
- Paying unemployment insurance taxes (UI) through the Montana Department of Labor & Industry
- Withholding state income tax from employee wages
Self-Employment Taxes for Montana LLC Owners
LLC owners automatically assume self-employment taxes, which are social security and Medicare contributions. Self-employment tax rate is 15.3%. This tax applies to net earnings that are above the IRS-set threshold.
To pay self-employment taxes, LLC owners in Montana have to:
- Pay quarterly estimated taxes to the IRS and the Montana Department of Revenue
- Maintain organized records of all expenses and income incurred through business activities.
Montana LLC’s IRS Submission Due Dates
March 15: Deadline for multi-member LLCs (Form 1065) and S Corporations (Form 1120-S)
April 15: Submission deadline for single-member LLCs and Schedule C (1040) and C Corporations (Form 1120)
January 31: The Latest date for employers to distribute W-2s, along with independent contractors’ 1099s
April 15, June 15, September 15, and January 15: Estimated quarterly tax payments are due
Non-Submission Penalties
Montana state and the IRS both have strict penalties in place for failure to submit tax returns on time.
Penalties include:
Late filing penalties: Not submitting your tax returns on time will result in a penalty of 5% per month up to 25% on your unpaid tax.
Late payment penalties: Not paying taxes within the payment period results in the accrual of interest on unpaid taxes from the due date.
Failure to pay taxes quarterly: Not paying estimated taxes quarterly could result in underpayment penalties from the IRS.
Failure to complete correct filings: Filing taxes inaccurately with insufficient information could lead to audits or even more fines.
How To Submit Taxes For A Montana LLC
Step 1 – Financial Record Compilation
- Statements of expenses and income
- Purchase orders and sales slips
- Employee payment data (if necessary)
Step 2 – Pick The Appropriate IRS Forms
- Single-member LLCs: Schedule C on Form 1040
- Multi-member LLCs: Along with Form 1065, they will also need Schedule K-1
- LLCs paying tax as corporations: Forms 1120 or 1120-S
Step 3 – Filing The Taxes
- Either do it directly via the IRS e-file system or through an authorized tax preparer.
- For tax compliance, it is advisable to use bookkeeping service providers like EasyBooks by EasyFiling or hire a CPA.
Common Tax Errors Not To Make
- Late filings are bound to attract IRS penalties so ensure you file within the outlined period: Missing deadlines.
- Not making estimated payments can attract underpayment penalties.
- Failing to properly classify business expenditures for maximized deduction opportunities is the highest level of ignorance.
- Self-employment tax is something that should not be ignored. LLC holders need to deal with this tax.
How EasyFiling Assists With Filing Taxes With A Montana LLC
EasyFiling aims to assist LLC owners in Montana with tax filing by providing:
- Timely and proper filing assistance with tax preparation services.
- tracking of income and expenses with our EasyBooks bookkeeping offer.
- tax burden reduction through guidance on credit and tax deduction uses.
- Monthly tax deduction estimation aids in preventing penalties.
- Help with IRS communication regarding audits or relevant tax notifications.
EasyFiling can assist any kind of business: single member LLC, multi-member LLC, or even a corporation, ensuring compliance with both Montana and federal filing requirements.
Final Thoughts
Your Montana LLC tax return will need some tax compliance and business activity for your single-member LLC or multi-member LLC. If you run a business, you must meet some deadlines and make payments on time.
Consider booking EasyBooks by EasyFiling to file taxes effortlessly, where they take care of record-keeping and compliance monitoring for you.
Frequently Asked Questions (FAQs)
1. Does an LLC in Montana have to pay state taxes?
LLCs in Montana do not have an income tax for LLCs. However, LLCs that have chosen to be taxed as corporations do pay the Montana Corporate income tax.
2. What tax documents are required by owners of single-member LLCs?
A single-member LLC has to file a 1040 with Schedule C and might include Schedule SE for self-employment tax.
3. Do owners of Montana LLC pay self employment taxes?
Yes. LLC owners receive income from the business, so the 15.3% self employment tax applies.
4. What are the consequences of not filing my Montana LLC taxes on time?
The consequences include late filing and payment penalties, interest on unpaid taxes, and possible audits.
5. What Montana LLC tax services does EasyFiling provide?
EasyFiling assists in tax preparation, bookkeeping, and compliance to ensure accurate and painless filing services.
For additional information regarding LLC formation and tax compliance, make sure to visit EasyFiling.us.
Nabin Adhikari
