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LLC Taxes Vary by State

LLC taxes can vary by state, so it’s important to research the tax laws in your state of formation and in any states where your LLC will do business.

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Overview

Introduction

Welcome to LLC Taxes Vary by State, your go-to guide for LLC tax information. As you know, LLCs are taxed differently than other business entities, and tax laws vary from state to state. This can make it difficult to understand how your LLC will be taxed.

Fortunately, we’re here to help. In this guide, we’ll provide an overview of LLC taxes in all 50 states, as well as some general tips on how to minimize your LLC’s tax liability.

We hope you find this guide helpful. If you have any questions, please don’t hesitate to contact us.

Taxes for LLCs in Different States

Taxes for LLCs can vary depending on the state in which the LLC is registered. For example, some states may tax the LLC at the corporate tax rate, while others may tax it at the personal tax rate. LLCs registered in multiple states may also be subject to different tax rates. It’s important to be aware of the tax rates in each state in which your LLC is registered.

Arizona

In Arizona, LLCs are taxed as follows:
-Self-employment tax: If you are the only member of your LLC, you will be taxed as a sole proprietor and will need to pay self-employment tax.
-Income tax: LLCs in Arizona are taxed as sole proprietorships, partnerships, S corporations, or C corporations. The LLC will need to file an income tax return with the state and pay taxes on its profits.
-Sales and use tax: The state of Arizona imposes a sales tax on the sale of tangible personal property and some services. The LLC will need to collect and remit this tax to the state.
-Property tax: Property taxes in Arizona are imposed by the counties and municipalities. The LLC will need to pay property taxes on any real or personal property it owns in the state.

California

An LLC, or limited liability company, is a business entity created in order to protect the owners, or members, from being held personally liable for the debts and obligations of the company. LLCs are taxed as either pass-through entities or corporations. This means that the business itself is not taxed, but the owners are taxed on their personal tax returns.

LLCs are required to file an annual tax return in the state in which they are registered. Most LLCs will also be required to pay annual fees and taxes to the state. The amount of these fees and taxes varies from state to state.

California does not have a general business tax for LLCs. However, LLCs with more than one owner may be subject to the California State Income Tax, which has a top marginal rate of 13.3%. LLCs with only one owner are not subject to this tax. There is also a $800 annual franchise tax that all LLCs operating in California must pay.

Colorado

In Colorado, LLCs are taxed as either C-Corporations or pass-through entities. LLCs with one owner are taxed as sole proprietorships and LLCs with multiple owners are taxed as partnerships. The tax rate for C-Corporations is 4.63%, and the tax rate for pass-through entities is 4%.

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Florida

If you’re like most business owners, you’re always looking for ways to save on taxes. And if you own a limited liability company (LLC), you’re in luck. LLCs are taxed differently than other types of businesses, and in some cases, they can save you a lot of money.

However, it’s important to note that LLC taxes vary from state to state. In Florida, for example, LLCs are taxed as follows:

-The state imposes a yearly tax of $138.50 on LLCs with assets over $150,000.
-There is also a corporate income tax of 5.5% on all LLCs operating in Florida.
-LLCs with assets under $150,000 are exempt from the state tax but still have to pay the corporate income tax.

Georgia

The state of Georgia does not have a personal income tax, so you will not be required to pay taxes on any money that you earn as an individual. However, you will still need to pay taxes on any business income that your LLC earns. The corporate tax rate in Georgia is 6%, which means that your LLC will need to pay this percentage on any money that it makes. In addition, you may also be required to pay local taxes depending on where your business is located.

Illinois

An LLC, or limited liability company, is a business structure that can combine the pass-through taxation of a partnership or sole proprietorship with the limited liability protections of a corporation. LLCs are easy and relatively inexpensive to set up and maintain, which makes them attractive to small business owners.

Since an LLC is not a corporation, it is not subject to corporate income tax. Instead, all profits and losses “pass through” the business to the LLC owners, who report them on their personal tax returns. However, depending on the state in which your LLC is located, you may be required to pay state taxes on your LLC’s earnings.

In Illinois, LLCs are subject to what’s called the Service Use Tax (SUT). The SUT is imposed on businesses that use certain types of services in Illinois. These services include advertising, professional services (such as accounting, legal and consulting services), and maintenance and repair services. The SUT rate is 6%, which means that if your LLC has $10,000 in taxable service receipts, you’ll owe the state $600 in taxes.

Indiana

As an LLC, taxation of your business depends on how your LLC is taxed by the IRS.

If your LLC is taxed as a sole proprietorship, then you will file a Schedule C with your personal tax return and pay taxes on the net profit of your business.

If your LLC is taxed as a partnership, then you will file Form 1065 with the IRS and each partner will receive a Schedule K-1 detailing their share of profits or losses. These profits or losses will be taxed on the partners’ individual tax returns.

If your LLC is taxed as a C corporation, then you will file Form 1120 with the IRS and pay corporate taxes on the business’ net profit. The owners of the LLC will not pay taxes on profits distributed to them; however, they may have to pay personal taxes on any salary or dividends received from the company.

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Michigan

If you have an LLC with members in multiple states, you will need to file taxes in each state where you have members. For example, if your LLC has members in Michigan and Ohio, you will need to file taxes in both states.

There are two types of taxes that an LLC might have to pay: income tax and franchise tax. The LLC might also have to pay other taxes, such as sales tax or property tax.

Income Tax
An LLC with members in Michigan will have to pay income tax to the state of Michigan. The tax rate is 4.25% for most LLCs, but it can be higher or lower depending on the type of business the LLC is engaged in. For example, if the LLC is engaged in agriculture or forestry, the tax rate is 2.5%. If the LLC is engaged in manufacturing or interstate commerce, the tax rate is 6%.

The income tax must be paid on all profits that the LLC earns, regardless of where the profits are earned. So if the LLC has members in other states, it will still have to pay Michigan income tax on any profits that are earned from business activities conducted in those other states.

Franchise Tax
An LLC with members in Michigan will also have to pay franchise tax to the state of Michigan. The franchise tax is $50 for most LLCs, but it can be higher or lower depending on the type of business the LLC is engaged in. For example, if the LLC is engaged in agriculture or forestry, the franchise tax is $10. If the LLC is engaged in manufacturing or interstate commerce, the franchise tax is $100.
Franchise taxes are generally due every year when you renew your business license with the state of Michigan.

Nevada

No state tax is imposed on LLCs in Nevada. However, the LLC must pay an annual $200 fee to the state. This fee is paid when the LLC files its annual list of members with the Nevada Secretary of State.

New York

New York taxes LLCs at a rate of 7.1%, which is imposed on the LLC’s business income. LLCs with income from sources outside of New York (such as from another state or from the federal government) may be subject to an additional tax on that income. New York City and Yonkers also impose their own taxes on LLCs, at a rate of 8.85% and 10.42%, respectively.

North Carolina

North Carolina’s tax treatment of LLCs is relatively favorable. North Carolina does not have a general business tax, so LLCs are only subject to state and federal income taxes. However, there is a franchise tax of $200 for all LLCs that do business in the state, regardless of whether they are profitable. Additionally, North Carolina imposes a Use Tax on purchases made by businesses from out-of-state retailers, which is currently set at 4.75%.

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Pennsylvania

Pass-Through Tax Treatment: Like all LLCs, Pennsylvania LLCs are pass-through entities for tax purposes. This means that the LLC itself is not subject to taxation at the state level — instead, the taxes are “passed through” to the individual members of the LLC, who then report their share of profits (or losses) on their personal tax returns.

Corporate Income Tax: Pennsylvania’s corporate income tax rate is 9.99 percent. However, many small businesses in Pennsylvania are exempt from this tax — specifically, businesses with gross receipts of less than $50,000 in the previous tax year.

Sales Tax: Pennsylvania has a general sales tax rate of 6 percent, which applies to most retail sales and some services. However, there are certain items that are exempt from sales tax, including food for home consumption and clothing costing less than $50 per item.

Pennsylvania offers a number of tax breaks and incentives for businesses, including a research and development tax credit and a property tax abatement program for businesses located in enterprise zones.

Texas

In Texas, LLCs are taxed as either partnerships or corporations. The IRS will automatically treat your LLC as a partnership unless you file Form 8832 and elect to be treated as a corporation. If your LLC has more than one member, it will be taxed as a partnership. If it has only one member, it will be treated as a disregarded entity for tax purposes, and the LLC’s income and expenses will be reported on the member’s personal tax return.

Corporate income tax rates in Texas range from 5.25% to 8.25%, depending on the amount of income earned. The state also imposes a franchise tax on LLCs that do business in Texas. The franchise tax rate is 0.5% of the LLC’s gross receipts, with a minimum tax of $200.

LLCs that are not taxed as corporations may have to pay the state’s gross receipts tax instead. The gross receipts tax is imposed on most businesses’ total revenue, regardless of whether or not the business is profitable. Rates range from 0% to 2%.

Washington

If you form a Washington LLC, you will need to pay annual taxes to the state. The amount of tax you’ll pay depends on the amount of revenue your LLC brings in.

Your LLC will also be required to pay annual corporate taxes to the IRS. The amount of tax you’ll pay will depend on the amount of revenue your LLC brings in.

Conclusion

While it may seem like there are a lot of tax considerations for LLCs, the process is actually fairly simple. LLCs are taxed as either partnerships or sole proprietorships, depending on the number of members in the LLC. The taxes are then paid by the LLC owners themselves, not by the LLC itself.

There are a few states that have special tax laws for LLCs, but in most cases, LLCs are subject to the same state and federal taxes as any other business. The key is to make sure you understand the tax laws in your state and file your taxes on time.

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