As with any business structure in Ohio, a Limited Liability Company (LLC) bears certain tax responsibilities starting from formation and during every operational term.
You need to pay attention to these requirements for your LLC, whether it is a single-member or multi-member LLC, to stay compliant with the IRS and avoid penalties.
In this article, we will discuss the process of IRS tax return filing for Ohio LLC, focusing on classifying the taxes, reporting the taxes, deadlines, and other relevant details.
How Are Ohio LLCs Taxed?
The taxation of LLCs in Ohio is dependent on their ownership model.
A single-member LLC is treated as a disregarded entity, where its income and losses will be passed on his/her 1040 personal tax return, together with a Schedule C profit or loss from business. The single-member will be responsible for paying self-employment taxes together with the estimated quarterly payments.
A multi-member LLC is, by default, considered a partnership and pays taxes as one. It will require a taxation return Form 1065, and the multi-member LLC pays out each member’s share using Schedule K-1 where the member can then claim the income on his/her tax return.
LLCs may also opt for S-Corp or C-Corp taxation status. This means an S-Corp will pass profits through to its owners in the form of K-1s filed together with Form 1120 S, which decreases the self-employment tax obligation.
A C-Corp will file Form 1120 pay corporate tax and distribute the dividends to shareholders. Higher taxed profits are passed through to their shareholders, in the form of dividends, so C-corporations pay corporate taxes.
Federal Tax Filing Requirements for Ohio LLCs
A. Single-Member LLCs
For tax compliance, a single-member LLC is viewed as a “disregarded entity“, meaning that a separate tax return does not need to be filed for the LLC. However, the business owner will still need to:
Report Business Income on Schedule C: Business-related inflows and outflows of cash must be reported on Schedule C (Profit or Loss from Business) attached to Form 1040.
Pay Self-Employment Taxes: As self-employed, the owner of the LLC will need to pay self-employment tax, which covers Social Security and Medicare through Schedule SE.
Make Estimated Quarterly Tax Payments: The business owner will have to make estimated tax payments on a quarterly basis by submitting Form 1040-ES if significant income is earned to avoid penalties.
B. Multi-Member LLCs
Multi-member LLCs are classified as partnerships for tax purposes. They must:
File Form 1065 (U.S. Return of Partnership Income): This form captures the total income, deductions, and income from profits for the LLC
Distribute Schedule K-1 to Members: Each member within the LLC is issued a Schedule K-1, which provides information regarding the member’s share of income, the losses, and deductions from the LLC. This is then used when filing their returns.
Pay Self-Employment Taxes: Members are responsible for paying self-employment taxes on their share of earnings unless the LLC elects to be taxed as an S-Corp.
C. LLCs Taxed as Corporations
The LLCs choose corporate taxations which automatically come along with different rules such as:
Required to file: Form 1120-S. S-Corp taxation is elected, and Schedule K-1 must be given to shareholders along with the filing.
Required to file Form: 1120 for C-Corp taxation. Corporate income tax must be paid as a C-Corp after the LLCs vote to pay it from the net earnings.
Pay for employees: Included with payroll taxes for employees under the LLC.
Ohio State Tax Obligations for LLCs
Alongside filing for federal taxes, these taxes also need to be accounted for. These are the Common obligations for the State of Ohio LLC which need to be fulfilled.
Commercial Activity Tax (CAT): This tax is automatically added to businesses with gross earnings over 150K in Ohio. This tax acts as a company privilege tax that taxes the company revenue and not profits. An LLC that meets these requirements has to fill and submit a CAT return along with the needed tax payments.
Ohio State Income Tax: All business owners are required to report all profits on their tax return for Ohio. Ohio has set a range of tax charges that increase the higher your income becomes.
Ohio Sales and Use Tax: An LLC that sells goods or provides certain services is required to collect sales tax from consumers and forward it to the Ohio Department of Taxation.
Withholding Taxes: An Ohio LLC with employees must withhold state income tax and submit it to the Ohio Department of Taxation on behalf of the employee.
Important Tax Documents for Ohio LLC Owners
To ensure compliance, owners of an LLC in Ohio will need to monitor certain tax documents. Several key documents must be monitored:
Form 1040: Used by the sole member LLC owners when reporting business income.
Schedule C: Must be filed by single members LLCs for reporting the business’s income and expenses.
Form 1065: Must be filled out by a multi-member LLC to report the income, deductions, and distributions.
Schedule K-1: Given to all members to report their portion of the profit or loss of the LLC business.
Form 1120 or 1120-S: Completed by LLCs that opt for C-Corp or S-Corp taxation.
Form 1040-ES: Used for the calculation of estimated quarterly taxes.
Ohio CAT Return: This field is for LLCs that go over the limit set by the state for the commercial activity tax.
Sales Tax Returns for Ohio: An LLC that sells taxable goods or services is responsible for filing sales tax returns.
Maintaining these documents reduces the likelihood of mistakes and makes filing easier and more efficient overall.
Key Tax Deadlines for Ohio LLCs
| Tax Type | Form | Due Date |
| Single-Member LLC | Schedule C (Form 1040) | April 15 |
| Multi-Member LLC | Form 1065 & Schedule K-1 | March 15 |
| S Corporation | Form 1120-S & Schedule K-1 | March 15 |
| C Corporation | Form 1120 | April 15 |
| Estimated Quarterly Taxes | Form 1040-ES | April 15, June 15, Sept 15, Jan 15 |
| Commercial Activity Tax (CAT) | CAT Return | May 10 (annual) / Quarterly |
How to File Taxes for Your Ohio LLC
Paying taxes for your Ohio LLC consists of the following:
Apply for an EIN: If there are employees or multiple members in the LLC, an employer identification number (EIN) has to be applied for with the IRS.
Maintain Proper Records: Accurate tracking of income, expenses, and even write-offs are all part of good bookkeeping.
Hire a CPA or Get Tax Software: Not using a CPA or tax software often results in losing compliance and proper deduction maximization.
File Tax Returns in Person: The Ohio Department of Taxation, like the IRS, lets users file their tax reports online, which makes the entire process much easier and quicker.
Tax Deductions for Ohio LLCs
These deduction possibilities serve to reduce the tax burden on the Ohio LLCs:
- Rent, utilities, office supplies, equipment, and other business expenses.
- Salary and other compensations of employees.
- Expenses related to travel and transportation, and even mileage.
- Professional services such as advertising and marketing, as well as their expenses.
- The part of the house used as an office by the filer working out of their residence.
Penalties for Late Filing
The failure to submit the taxes in time can lead to a few punishments:
Delinquent-Filing Penalty: The delay in filing often results in Partnerships and S-Corps being fined $205 per member.
Failure to Pay: Not paying taxes incurs interests and penalties which only grow with time.
IRS Audits and Legal Problems: Not following regulations might lead to IRS audits and other legal problems.
How EasyFiling Can Assist You with Your Ohio LLC Tax Filing
While filing taxes for your Ohio LLC may be intricate, EasyFiling makes it easier. Our tax professionals offer the following:
Accurate Tax Segment Filing: We do federal and state tax segment filing so that you do not fall into compliance cross errors.
LLC EasyBooks: EasyBooks records revenue, expenditure, and allowable expenses so that you do not struggle when it comes to tax filing.
Tax Liability Engineering: We will help you increase your allowable expenses and minimize the payable taxes.
Estimated Tax Payments Assistance: Help you avoid IRS fines by helping with your anticipated tax payments.
Ohio Registered Agent Services: Appoint EasyFiling as your registered agent for compliance with Ohio laws.
Conclusion
It might surprise you to know that owners of an LLC in Ohio are bound to follow specific federal and state tax rules. If it is a single-member LLC or a partnership, corporate tax filings need to be done in a timely manner, otherwise, it could lead to issues.
You can automate the whole tax filing process using tax services, or EasyBooks bookkeeping solutions on EasyFiling.
Have issues with automating the tax filing procedure? EasyFiling’s experts are just a message away to assist you!
Frequently Asked Questions (FAQs)
Which tax form needs to be filled by the IRS by an Ohio LLC owner?
As for Form 1065, if it is an LLC taxed as a partnership, or Form 1120 if it is taxed as a corporation. Generally, a single-member LLC will fill Schedule C (Form 1040) in addition to their tax return.
Is there a self-employment tax that an owner of an LLC in Ohio has to pay?
If treated as a partnership or disregarded single-member LLC, then yes, payment of self-employment taxes would have to be made on the owner’s share from income received from the LLC.
What date do you need to file an Ohio LLC tax return?
Unlike Partnerships, LLCs make a tax return by the 15th of March every year. That said, it also depends on what the LLC is taxed, for example, Corp’s file at a different time.
How does an owner of an LLC pay tax on his earnings through the LLC?
If you are the only member of the LLC, you can file under Schedule C. If the LLC has more members, you can use K-1 as a face for partnership tax reporting.
What are other tax obligations of the owners of the LLC in Ohio aside from the federal ones?
Other than the entire country, Ohio set additional conditions to be met by LLC owners above the $150k gross receipts mark which include paying the Ohio Commercial Activity Tax. Depending on your business’s location, you could also be eligible for local city taxes.
Nabin Adhikari
