
You’ve launched your first LLC, but now the questions are piling up: what forms do you need to file, which deductions can you claim, and how exactly does filing business taxes for an LLC for the first time work? It’s normal to feel overwhelmed. By the time you finish reading this blog, you’ll have a clear understanding of the steps to take, the common mistakes to avoid, and how to make your first year of LLC taxes much more manageable.
Understand How the IRS Sees Your LLC
The first thing to know is that the IRS doesn’t automatically treat your LLC as a specific tax entity. Your LLC is a legal structure that protects your personal assets, but how it’s taxed depends on its size and any elections you make. For most first-time LLC owners, sticking with the default classification is the simplest path. Here’s a quick breakdown:
Solo Owner? You’re a “Disregarded Entity”
This simply means the IRS sees your business and you as one. Your LLC’s profit and loss flows directly onto your personal tax return using Schedule C, or Schedule E for rentals, attached to Form 1040. No separate business return is needed.
For instance, Jane runs a small online shop as a single-member LLC. Her revenue for the year was $50,000, and her deductible business expenses were $20,000. Her net income is $30,000. She reports this on Schedule C and calculates self-employment tax on the $30,000 using Schedule SE. Jane also checks for deductions she might have missed, like software subscriptions and business meals.
Even with simple filings, staying organized is crucial. Track everything and reconcile your records monthly so that the year-end process feels manageable.
Have a Partner? You’re automatically a Partnership
Multi-member LLCs are taxed as partnerships, requiring a separate return and reporting how profits are split among members. The LLC files Form 1065, and each member receives a Schedule K-1 to report their share of partnership activity on their personal return.
For example, two friends, Mike and Sarah, co-own a consulting LLC. The business earns $100,000, and total expenses are $40,000. Each member’s net share is $30,000 after accounting for guaranteed payments. Form 1065 shows total income and deductions, and each receives a K-1 to report $30,000 of income on their individual returns. Keeping accurate records of each member’s contributions and distributions prevents errors and disputes.
Considering S-Corp?
Some LLCs elect S-corp or C-corp status for tax advantages. While it’s a powerful strategy, it comes with additional filing requirements. For first-time LLC owners, starting with the default classification is often the simplest.
Later, as profits grow, you can consider S-corp elections to reduce self-employment taxes. If your business is growing and your current structure isn’t supporting it, check out our guide on the benefits of switching to an S-Corp to see if it’s the right move.
Prepare Your Business Before Filing
Preparation makes your filing experience stress-free; You don’t want to scramble at the last minute. So, start with the basics:
Get an EIN (Employer Identification Number)
This is your business’s version of a Social Security number and is required if you have employees or want to open a separate business bank account. Separate books and records (business vs. personal) are a common corporate formality that’s required to maintain LLC protection.
Keep Your Books Clean
Use a dedicated business bank account and track every dollar in and out. Tools like QuickBooks or Xero can automate this, saving you countless hours and headaches when it’s time to file.
Choose your tax year and accounting method
Most new LLCs default to the simplest path: the calendar year (Jan-Dec) and the cash method of accounting. Cash method means you record income when you receive it and expenses when you pay them. It’s the most intuitive way to track your money.
Gather Your Documents Early
Create a folder (digital or physical) for the tax year and collect all your:
- Income records (invoices, payment platform statements)
- Expense receipts (mileage, office supplies, software subscriptions)
- Bank and credit card statements
- Proof of start-up costs
Plan for estimated taxes
As a business owner, no one withholds taxes from your pay. If you expect to owe $1,000 or more for the year, you generally need to make quarterly estimated tax payments. A good rule of thumb is to set aside 25-30% of your net income to make your tax bill manageable.
Top Deductions and Credits for LLCs
Think of tax deductions as the government’s way of saying, “We won’t tax you on the money you had to spend to make money.” Claiming every deduction you’re entitled to is one of the best ways to lower your tax bill. A common mistake first-timers make is being too conservative or careless with record-keeping; if an expense is ordinary and necessary for your business, it’s likely deductible.
Home Office Deduction
If you have a space used exclusively and regularly for business, you can deduct a portion of your rent, mortgage interest, utilities, and insurance. You can also use the simplified method to calculate your deduction: $5 per square foot, up to 300 sq. ft.
Vehicle Expenses
You can deduct business miles using either the standard mileage rate (70 cents per mile for 2025) or the actual expense method (a pro-rata portion of gas, maintenance, insurance, repairs).
Pro tip: You must track your mileage throughout the year to validate the split between the business use and personal use of your vehicle. We recommend phone apps such as MileIQ for this.
Business Supplies & Software
This includes laptops, printers, office furniture, and subscriptions for tools like QuickBooks, design software, or stock photos. Domain names and recurring online tools used exclusively for business are also deductible.
Health Insurance Premiums
If you’re self-employed and not eligible for coverage through a spouse or employer, your health, dental, and long-term care insurance premiums are often deductible. Many new business owners overlook this one.
Qualified Business Income (QBI) Deduction
Beyond day-to-day expenses, there’s a powerful deduction specific to pass-through entities: the QBI deduction. It lets LLC owners deduct up to 20% of their qualified business income. For single filers in 2025, the threshold is $197,300. Most first-year LLCs fall below this limit, qualifying for the full deduction.
The Golden Rule: Document Everything. The IRS can approximate some expenses, but they need evidence that you acted in good faith. So, set a “monthly money date” one hour each month to organize receipts, update your mileage log, and categorize transactions. This simple habit makes tax season far less stressful.
Deadlines and Extensions for LLC Owners
When you’re filing business taxes for your LLC for the first time, keeping track of deadlines is your #1 defense against costly penalties and unnecessary stress. The dates can be confusing because they depend on how your LLC is taxed. However, we make it simple for you to follow:
Your LLC’s Federal Tax Return Deadline
- Single-Member LLC: April 15, 2025 (Schedule C or E on Form 1040)
- Multi-Member LLC: March 15, 2025 (Form 1065), K-1s due to Owners
- LLC Electing S-Corp: March 15, 2025 (Form 1120-S), K-1s for owners
Tax Deadline Extensions
There’s a common misconception among business owners that an extension gives you more time to pay the tax you owe. That’s not true; filing extensions give more time to submit paperwork, not to pay taxes owed. You must make the payment by the original deadlines to avoid IRS penalties.
Pro tip: IRS expects you to pay as you earn. So, if you expect to owe $1,000 or more in tax for the year, make those payments to avoid the underpayment penalty.
The Quarterly Deadlines
- April 15 (for Jan-Mar income)
- June 15 (for Apr-May income)
- September 15 (for Jun-Aug income)
- January 15 (for Sep-Dec income)
An effective tax strategy would be to get into the habit of setting aside 25-30% of your net income for these payments. It helps you in managing your tax bills into manageable, quarterly chunks.
First-Year LLC Strategies and Tips
- Start bookkeeping from day one: Use a dedicated business bank account and a simple app or spreadsheet from your very first transaction.
- Track all expenses meticulously: No receipt means no deduction from the IRS point of view. Hence, save all business-related receipts religiously.
- Consider quarterly estimated payments: The IRS requires you to pay as you earn. Missing these payments can lead to penalties.
- Revisit entity elections as profits increase: What might be right for your business, making $40k, might be wrong when you’re making $140k.
- Keep records for at least three years: The IRS typically has three years to audit a return, but they can go back six years if they suspect you underreported income by 25% or more.
Conclusion and Next Steps
Filing business taxes for an LLC for the first time can feel overwhelming. However, breaking it into steps and understanding your options makes it manageable. Start with clean bookkeeping, know your IRS classification, track deductions, and plan estimated payments.
If you want to make your first LLC tax season stress-free, our team at Attracct can support you with clean bookkeeping to tax preparation, and filing.
FAQs
Do I need to file a separate return for my LLC?
Single-member LLCs use their personal return. Multi-member or S-corp elections require separate returns.
What if my LLC made no income?
You usually still file an informational return.
Which deductions are valid for home office or vehicle use?
Only the portion used exclusively and regularly for business. Keep detailed logs.
How do state taxes interact with federal?
State taxes are separate. Many states have franchise fees or minimum taxes.
How much money does an LLC have to make to file taxes?
Even if your LLC earns nothing, you usually still need to file. Single-member LLCs report on Schedule C, while multi-member LLCs or S-Corps file their respective business returns.
How much can you write off your first-year LLC?
You can deduct most ordinary and necessary business expenses, like equipment, software, office supplies, and marketing. Startup costs over $5,000 may need to be amortized.
Can I file my LLC taxes by myself?
Yes, single-member LLCs are straightforward on Schedule C. Multi-member or S-Corp filings are more complex, so software or a CPA can help avoid mistakes.
Do LLCs need to file federal tax returns?
Single-member LLCs use their personal return. Multi-member LLCs file Form 1065. LLCs electing S-Corp file Form 1120-S. Filing is usually required, even if there’s no profit.
Can I switch to S-corp mid-year?
Yes, but timing is critical. Elections must follow IRS rules to take effect for the desired tax year.