Paying taxes for an LLC in Idaho is the owner’s responsibility, as they must follow regulations set forth by the Idaho State Tax Commission and IRS.
Aside from gross income and business structure, your LLC’s tax classification determines how you file your taxes.
In this article, we will discuss the process of IRS tax return filing for Idaho LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
Idaho LLC Tax Classifications
An Idaho LLC is flexible regarding how it can file taxes with the IRS. It can choose various classifications based on the LLC owner’s election. Below are the most common tax classifications:
1. Single-Member LLC
Typically, a single-member LLC (SMLLC) is regarded as a ‘disregarded entity’ for taxation in America. This applies to:
- A makes and expenses will be part of the owner’s tax declaration (with his personal account), which means it goes to Form 1040 from the IRS as Schedule C.
- Self-employment Taxes such as Medicare and Social Security taxes will apply.
- If a deemed tax liability results in the owner equal to or exceeding $1,000, then estimated tax payments may be required to be paid quarterly.
2. Multi-Member LLC
By default, a multi-member LLC is considered a partnership for tax purposes. This means:
- The LLC is required to submit Form 1065 (U.S. Return of Partnership Income).
- Every member is allocated a Schedule K-1 (Form 1065) detailing their profits and losses.
- Members report their income on their tax returns and might face self-employment taxes.
3. LLC Taxed as an S Corporation
An LLC may choose to be taxed as an S Corporation (S-Corp) by submitting Form 2553 to the IRS. Key benefits include:
- Owners can take part of earnings as salary which reduces the self-employment tax burden.
- The LLC is required to file Form 1120-S (U.S. Income Tax Return for an S Corporation).
- Shareholders declare their share of income in their tax returns using the Schedule K-1 (Form 1120-S).
4. LLC Taxed as a C Corporation
An LLC may also choose to be taxed as a C Corporation (C-Corp) by filing Form 8832. In this scenario:
- The LLC is required to file Form 1120 (U.S. Corporation Income Tax Return).
- Profits are paid out at corporate tax rates and can suffer from double taxation (corporate and dividend tax).
Idaho State Tax Obligations
Idaho LLCs are also subject to tax compliance at the state level which includes:
1. Idaho State Business Income Tax
- Idaho LLCs assumed to be taxed as corporations or partnerships have to also file a state income tax return.
- The Idaho corporate income tax is a flat rate of 6.5% of net taxable income.
2. Idaho Sales Tax
- If your LLC conducts sales of goods or taxable services in Idaho, you need to apply for a sales tax permit and charge customers 6% sales tax.
3. Employer Taxes
- Employing Idaho LLCs are required to register with the Idaho State Tax Commission to withhold state payroll taxes and pay unemployment insurance tax.
4. Annual Report Requirement
- To remain in active status, Idaho LLCs are required to submit an annual report to the Idaho Secretary of State. The submission has no fee associated with it.
IRS Tax Filing Deadlines for Idaho LLCs
The deadlines for LLCs in Idaho are essential to keep in mind if you want to avoid penalties. Below you will find a comprehensive list of the deadlines:
Single-Member LLC (Schedule C): April 15, the same business day, any subsequent day falling on a holiday works too.
Multi-Member LLC (Form 1065): March 15 and can be filed with an extension until September 15.
S Corporation (Form 1120-s): March 15th and is subject to an extension until September 15.
Every C Corporation (Form 1120): April 15 but this extension also works until October 15.
Quarterly sum of tax payments: the last date is January 15, for the rest, it is April 15, June 15, and September 15.
Filing IRS Tax Returns for an Idaho LLC
Here’s how you can file your taxes for an Idaho LLC:
Determine your Tax Classification: Decide whether your LLC will be taxed as a sole proprietorship, S-Corp, partnership, or C-Corp.
Gather Financial Documents: Get together income statements, expense reports, payroll documents, and receipts.
Prepare Internal Revenue Service Forms: Prepare the needed IRS forms according to your chosen tax classification.
File Taxes: File your tax return via the IRS e-file system or send it in via paper file.
Pay any taxes owed: Pay your taxes through the IRS Direct Pay system. If you cannot pay, you may set up an installment agreement.
Idaho State Tax Returns: State tax returns can be filed on the Idaho State Tax Commission’s website.
Penalties
Late submission of taxes borders on negligence and can impose some punishments, such as:
- Late submission penalties: Taxes that go unpaid will incur 5% per month (up to 25%).
- Failure to Pay: If taxes remain unpaid every month add a 0.5% fee.
- Interest on unpaid: Interest on unpaid taxes will accrue daily until the debt is settled.
- State penalties: Idaho offers its own set of late fees and interest based on unpaid state taxes.
How EasyFiling Assists with Idaho LLC Taxes
For business owners with various tax responsibilities, submitting your IRS and Idaho state taxes can be tedious. With EasyFiling, you have access to personalized services such as:
- Helping an LLC define its tax classification to maximize benefits.
- Preparation and filing of IRS tax returns for individuals, partnerships, S corporations, and corporations (Forms 1040, 1065, 1120-S, and 1120).
- All aspects of state taxes filing as necessary to meet Idaho’s state tax requirements.
- Organizational and bookkeeping services offered by EasyBooks to have up-to-date business documents.
- Consultations on other tax issues and audits to aid taxpayers in understanding complex tax regulations that may lead to consequences of noncompliance.
By using EasyFiling services, LLCs based in Idaho can remain compliant while concentrating on their business expansion. Avoid wasting time and potential errors by letting us manage your tax filings.
Final Thoughts
Completing tax returns with the IRS for an Idaho LLC is a critical step in operating a legal and profitable venture.
Understanding tax classification, complying with set deadlines of the IRS and Idaho, paying taxes due, and avoiding infractions will help you stay in good standing with the relevant authorities.
Bookkeepers and tax professionals are available if you do not want to handle taxes directly. EasyFiling has an EasyBooks service that can assist with tax preparation.
For more help with EasyFiling when it comes to tax filing for your Idaho LLC, don’t hesitate to reach out to us!
Frequently Asked Questions (FAQs)
1. Do I have to file a tax return with the IRS if my Idaho LLC made no profit?
Yes, you do. It does not matter whether your Idaho LLC made any profits or not; you will still have to submit a tax return in order to remain compliant and avoid the possibility of having to pay fines.
2. What are the consequences of missing the IRS tax submission deadline?
There are several consequences to missing the tax submission deadline. These can include penalties for filing late, interest fees, and taxes that may further increase the penalties imposed by the state if you owe taxes.
3. Am I able to change how my Idaho LLC is classified for tax purposes?
You can, indeed. Feel free to change the tax classification of your LLC by submitting an 8832 form with the IRS if you want to elect C-Corporation status, or you can switch to S-Corporation status if you complete a 2553 form and submit it to the IRS.
4. Is it necessary to obtain an EIN for an Idaho LLC?
It especially is if your LLC is a multi-member LLC or if it has employees, as well as when the LLC elects to be taxed as an S-Corp or C-Corp.
5. What are ways I can lower tax burdens if I am an Idaho LLC owner?
You can lower tax burdens by electing to change the business class of your LLC into an S-Corp, which lowers self-employment taxes. Business expenditures can also increase tax deductions, and keeping meticulous records of your financial transactions on EasyBooks provided by EasyFiling can assist in significantly reducing tax liabilities.
Nabin Adhikari
