Business taxes Payable by Louisiana LLCs
Your Louisiana LLC will be required to pay a wide variety of business taxes. They include tax payable to the government of Louisiana such as state tax and sales tax. You will also be required to pay self-employment, federal, and perhaps even payroll tax to the IRS. Fortunately, Incfile offers a complete Business Tax Filing Service for businesses that want help with their taxes.
How Are Louisiana LLCs Taxed?
The profits of a Louisiana LLC aren’t taxed at the business level such as those of C Corporations. Instead, taxes for Louisiana LLCs work as follows:
– The owners of Louisiana LLCs are required to pay self-employment tax on business profits.
– The owners of Louisiana LLCs are required to pay state tax on any profits, less deductions or state allowances.
– All owners of LLC are required to pay federal income tax on profits less deductions or federal allowances.
– Employers are required to pay payroll tax on salaries paid to employees.
– Employees are required to pay state, federal, and payroll tax on earnings.
– Some LLCs in Louisiana are required to pay sales tax on the products they sell.
Items 1, 2 and 3 are taxed as “pass-through” income for the LLC managers, owners, or members that receive profits the business generates. Profits are reported on both federal and personal tax returns, which is where the taxes are paid.
State Taxes for LLCs in Louisiana
You will be required to pay the Louisiana Department of Revenue two main types of tax:
– State Income Tax
– State Sales Tax
State Income Tax Payable on Louisiana LLC Earnings
You will be required to pay state tax on any money paid to yourself as a business owner in Louisiana. The earnings flow through to your personal tax return, which is where the income tax is paid. You will be taxed at the standard rates for state taxes in Louisiana and you can apply regular deductions and allowances. Salaries employees will also be required to pay personal state taxes in Louisiana. The state tax in Louisiana varies from 2 to 6 percent, but this will depend on how much you earn.
Louisiana Sales Taxes on Sales Generated by LLCs
If you sell certain types of services or physical products, you may be required to collect sales tax and then pay it to the Louisiana Department of Revenue. Sales tax in Louisiana is collected at the point of purchase. LA sales tax rates vary depending on the city, county, or region where you are located.
You will usually be required to collect LA sales tax on:
– Tangible, personal goods and property you sell such as cars, furniture, raw materials, books, appliances, electronics, etc.
– Services offered by your Louisiana business
The vast majority of states don’t levy sales taxes on goods considered necessities such as food, clothing, medications, or gas.
Sales Tax Rates for a Louisiana LLC
Sales tax rates usually vary between cities, counties, and states. The state will typically set a base sales tax rate, then specific cities and counties may levy small additional sales tax amounts on top of that.
Federal Self-Employment and Income Taxes for a Louisiana LLC
Every Louisiana LLC will be required to pay several different federal taxes, which include federal income tax and self-employment tax, which are taxed as “pass-through” income via tax return forms.
Louisiana Federal Self-Employment Tax for LLCs
All Louisiana LLC business managers or member that take profits out of the LLC are required to pay self-employment tax. It is also referred to as FICA, Medicare, or Social Security tax. It applies to all earnings withdrawn from a Louisiana business. The current self-employment tax rate in Louisiana is 15.3%.
You can deduct your business expenses from your income when you work out the amount of self-employment tax you owe. Below are examples of the amount of self-employment tax you may be required to pay, depending on your earnings:
– If you have $30,000 in profits, you would be required to pay $4,950 in self-employment tax
– If you have $40,000 in profits, you would be required to pay $6,120 in self-employment tax
– If you have $80,000 in profits, you would be required to pay $12,240 in self-employment tax
– If you have $100,000 in profits, you would be required to pay $15,300 in self-employment tax
Treat the LLC as an S Corporation and Pay Less Self-Employment Tax
The IRS allows LLCs to be treated as S Corporations for the purpose of taxation. It can be a good way to reduce the amount of self-employed tax you pay by declaring part of your income as salary and other income as withdrawals or distributions.
To do this, you should make an “S Corporation Tax Election” with the IRS using Form 2553. If you want, we can file your Form 2553 with the IRS for you.
Speak to your accountant for additional information regarding the use of an S Corporation tax election to reduce your LLC self-employment tax in Louisiana.
LLC Federal Income Tax in Louisiana
You are also required to regularly pay federal income tax on earnings taken out of a Louisiana LLC. The amount of income tax that you pay will depend on your earnings, deductions, current income tax brackets, as well as how you file.
You are only required to pay federal income tax on the profits that your Louisiana LLC generates that you take out of the business, less certain deductions as well as allowances. It includes your tax-free amount, LLC business expenses as well as other deductions for areas such as healthcare and retirement plans (some).
Employer and Employee Taxes for Your Louisiana LLC
If you pay your employees, there will be some slightly different tax implications. Consult your accountant for clear guidance regarding your situation.
Louisiana Employer Payroll Tax Withholding for LLCs
All employers are required to collect and withhold payroll tax from employees when they receive their salaries. You are usually required to withhold 7.65% of the taxable salary paid to employees.
Employer State and Federal Tax Withholding for Your Louisiana LLC
You may also decide to withhold state and federal income tax on the wages paid to employees. Consult your accountant for additional information.
Employees May Be Required to File Tax Returns
Your employees may be required to file their own tax returns regardless of whether you withhold federal and state income tax in Louisiana.
Louisiana LLC Employee Insurance and Other Requirements
You may also be required to pay insurance for employees, such as unemployment tax or employee compensation insurance. There will also be other requirements that you have for your employees. You can visit the Louisiana Workforce Commission website for more requirements.
Other Taxes and Duties for Your Louisiana LLC
Your Louisiana LLC may be liable for several other taxes and duties, but this will depend on the industry you are in. For instance, if you are a gasoline seller, you may be required to pay tax on any fuel sold. Similarly, if you are an importer or exporter, you may be required to pay certain duties. Consult your accountant regarding other taxes you may be required to pay or withhold.
Estimated Taxes for Your Louisiana LLC
The vast majority of LLCs in Louisiana will never be required to pay estimated taxes throughout the year, depending on the expected amount of income and profit. The most common types of estimated tax in Louisiana are:
– Louisiana State Tax
– Federal Self-Employment Tax
– Federal Income Tax
Most LLCs in Louisiana pay estimated taxes 4 times a year. Talk to your accountant for additional details.
FAQs on Louisiana LLC Business Taxes
Is there Sales Tax in Louisiana?
Yes. Louisiana has sales tax that may vary among counties and cities.
Is there State Tax in Louisiana?
Yes. Louisiana has general state income tax.
Do I Have to Pay Estimated Taxes?
Yes. In the vast majority of instances, you are required to pay estimated taxes on your federal income tax, state tax, and self-employment tax in Louisiana. Consult your accountant for additional information.