Tax submissions for an LLC in Nevada are a pivotal task for business proprietors. Knowing the obligations of taxation as well as the dates they are due can assist you in evading any penalties while also making sure you follow IRS rules.
Though Nevada is notorious for their business-friendly tax policies, it does not mean that LLCs do not have to pay taxes at the country level.
In this article, we will discuss all important details about IRS tax return filing for Nevada LLCs including the classification of taxes, forms that need to be filled, deadlines, state specifications, and more.
How Nevada LLCs are Taxed
One reason why many people set up LLCs in Nevada is the absence of corporate income tax, franchise tax, and state personal income tax.
Apart from that, all LLCs set up in Nevada are subject to the IRS’s federal tax regulations. A Nevada LLC will be taxed according to its federal classification.
LLCs usually do not have to pay tax on the entity level. Taxes are paid by the owners on their tax returns.
The owner may however elect S Corporation or C Corporation taxation with the IRS whereby entity taxation becomes an option.
Tax Classification of a Nevada LLC
An LLC in Nevada may be taxed in several ways depending on the number of members an LLC has and the tax election picked.
Single-Member LLC: The Internal Revenue Service (IRS) considers a single-member LLC as a disregarded entity by default. This means that income and expenditure made by the business and any deductions are claimed on Schedule C of the owner’s Form 1040. The business owner is liable to pay self-employment taxes (Social Security and Medicare) on the net earnings.
Multi-Member LLC: A multi-member LLC is an LLC that has more than one owner. If an LLC has more than one member, by default, it is considered a Multi-Member LLC for tax purposes. It must file Form 1065 with the IRS (U.S. Return of Partnership Income) and provide each member with a Schedule K-1 reporting their profit and loss share. Each member reports his/her allocated portion of net income or loss on their tax return.
LLC Electing S Corporation: A Nevada LLC may elect to be treated as an S Corporation after filing Form 2553. Under this choice, the LLC also completes the 1120-S form, and the profits or losses of the corporation pass through to the members’ tax returns without being self-employment taxed. However, unlike the other classification, owners must pay themselves a fair salary as wages and specifically withhold payroll taxes.
LLC Electing C Corporation Status: When an LLC chooses to be taxed as a C Corporation, the entity needs to file Form 1120 as well as pay federal corporate income taxes. Unlike pass-through entities, C Corporations face double taxation: one at the corporate level, and a second time when dividends are paid out of profit.
Important IRS Tax Forms for a Nevada LLC
Depending on your Nevada LLC’s tax classification, the following forms may be required:
Form 1040: Single-member LLCs are disregarded as separate entities for taxation purposes.
Form 1065: Multi-member LLCs taxed as partnerships.
Form 1120-S: Electing S Corporation taxation.
Form 1120: Electing C Corporation taxation.
Form 1099-NEC or 1099-MISC: If payments over $600 are made to independent contractors in a year.
Form 941 or 940: For an LLC with employees and payroll tax obligations.
Tax Filing Deadlines for a Nevada LLC
Nevada LLC owners should keep the IRS deadlines in mind so that they do not incur penalties:
March 15: Deadline for S Corporations and Partners to file Form 1120-S and Form 1065 unless an extension is filed.
April 15: Payment date for single-member LLCs (Schedule C) and C Corporations (Form 1120) if no extension was granted.
October 15: If an extension is granted, the new deadline is October 15 for S Corporations and Partnerships.
To file for an automatic tax return extension, single-member LLCs can fill out Form 4868, while corporations and partnerships will fill out Form 7004. Both forms will provide an automatic six-month extension.
Nevada State Taxes for LLCs
The state has favorable tax conditions for businesses, which is why it is a preferred southern region for businesses. Even though federated LLCs based in Nevada do not have to pay federal corporate income taxes, franchise taxes, or personal income tax, certain responsibilities remain at the state level, such as:
Annual List of Managers or Members: Nevada LLCs have to submit an annual report to the secretary of state of Nevada.
Nevada Business License Fee: All LLCs in Nevada are required to obtain a state business license that is renewed annually.
Modified Business Tax (MBT): Any LLC in Nevada that has employees is subject to the Modified Business Tax if total gross wages surpass a certain threshold.
Tax Deductions for Nevada LLCs
Taxable income for Nevada LLC owners can be reduced using amply available tax expenses. Such expenses involve:
Business Expenses: Office rent, utility, and supplies expenditure.
Costs of Vehicle Maintenance: Expenses that relate to vehicle operations, such as mileage driven, can be deducted for business activities.
Home Office Deductions: The portion of the residence used uniquely for conducting business.
Depreciation: Reduced value of equipment depending on how long it has been in use.
Employee Compensation: Salaries, insurance, and pension payments.
Marketing and Advertising: Expenditures related to the creation of a website, advertisements, and logos.
Professional Services: Payments for accounting, legal, and consulting services.
Meticulous documentation coupled with an experienced tax advisor assists in maximizing the tax deductions and minimizing the tax burden.
IRS Tax Payment Options
The IRS has set different modes for payment of income taxes:
EFTPS: An online service for payments of a business federal tax that is offered free of cost.
Direct Pay: A fast method that allows direct payments from a checking account.
Credit Card Payments: Payments for IRS can be processed with Visa and Mastercard through certain companies.
Check or Money Order: Clients can send checks with their forms to the IRS.
Avoiding late payment fees on tax is critical for anyone whose Nevada LLC may be charged federal taxes. Fourthly, estimate the payments during the year to avoid being charged in compliance.
Penalties for Late Filing or Non-Compliance
Not filing taxes and failing to meet deadlines can incur fees and interest along with some common penalties like:
- A Failure to File Penalty of up to 25% is a sum of unpaid dues not paid in five months.
- Failure to pay penalty which is the sum of unpaid dues exceeding a sum of 25%.
- There is also a late filing penalty for partners and S Corps where a share-holder is obliged to pay $220 every month.
To avoid penalties, submit tax returns and payments on time. Maintaining accurate accounting records, along with the help of a tax expert, can help avoid major errors.
How EasyFiling Can Help
When filing taxes for a Nevada LLC, it can be difficult for foreign owners or companies with atypical tax needs. EasyFiling makes the process easier by providing professional help on compliance and IRS filing along with bookkeeping. We provide our clients with:
- Guidance on how to properly classify tax for an LLC registered in Nevada.
- Preparation and filing of IRS tax forms.
- General bookkeeping and recordkeeping.
- After the provision of tax assistance, we ensure that our clients are not punished for violations of set rules.
Whether it is IRS forms, tax elections, or bookkeeping, EasyFiling takes the hassle out of the entire process.
Conclusion
Filing taxes for your Nevada LLC is one of the requirements you have to complete to comply with IRS regulations. Make sure to meet deadlines and know which forms to file to avoid penalties.
From a state perspective, consider the requirements so that your Nevada LLC does not fall out of good standing.
EasyFiling professional tax filing services make sure your business remains productive throughout the year.
Let us know how we can help you with your Nevada LLC taxes so you can focus on your business and stay compliant with IRS regulations.
Frequently Asked Questions (FAQs)
1. Am I required to file state taxes for my Nevada LLC?
Not really, there is no state-level corporate income tax for Nevada LLCs, however, there is a requirement for an annual report filing as well as for maintaining a business license. If you hire employees, you may also be liable for the Modified Business Tax.
2. What can go wrong if I don’t meet the due date for filing my Nevada LLC taxes?
There are serious consequences for not filing on time or missing the deadline. There is a late filing penalty of 5% per month (limited to 25%) and a late payment penalty of 0.5% per month (up to 25%) that can be imposed after certain periods.
3. Is it possible for my LLC in Nevada to file for a different tax classification?
Indeed, you can decide for your LLC to be taxed as a C Corporation or S Corporation. In this instance, you would need to submit the IRS Form 1120 or 1120-S.
4. What tax deductions can my LLC in Nevada claim?
Yes, deductions include business expenses, transportation expenses, home office expenses, employee expenses, and advertising expenses.
5. What are other methods I can use to settle the federal taxes of my LLC in Nevada?
Taxes can be paid using the EFTPS system, Direct Pay, payment via charge or debit card, or by sending a check together with the appropriate form.
Nabin Adhikari
