How Do You Pay Washington State LLC Taxes?
If you have formed an LLC in Washington state, and it’s time to pay your taxes, you may wonder what you should do. For example, if you have a sole proprietorship, it’s a simple matter of determining how much money you made by looking at your gross income, net income, and your deductions. However, if you have a limited liability company, there are certain aspects of operating a business under the umbrella of the LLC that need to be considered. Although your accountant could likely provide you with accurate information, it’s good to have a general idea of what to expect. Here is what you should do when trying to pay Washington state LLC taxes.
You LLC Is In Washington Pay The IRS Directly?
In most cases, if you have an LLC in Washington, you’re not going to pay your taxes directly to the IRS. This is because the option for a separate return does not exist. This falls on the members of the LLC because a limited liability company is a pass-through entity. Any taxes that are owed are going to go directly to the owner of the company, and any members of the limited liability company that are also profiting from its activity. Members will be responsible for reporting losses and income, and this will be presented on a 1040 federal tax return. Likewise, similar to a sole proprietorship, a Schedule C form will also be added to your tax return to stay compliant with federal laws.
How Much In Taxes Will You Have To Pay?
The amount that you pay in taxes will be just over 15%. 12.4% will go to Social Security, and 2.9% will go to Medicare. You also have to take into account the differences between a single-member LLC, and one that has multiple members. A single-member LLC is only required to file the 1040 income tax return. Schedule C is going to report profits and losses. On the other hand, if there are multiple members as part of the LLC, the IRS will look at this as a partnership. Form 1065 must be filed, which will include what is called Schedule K-1. This is where the profits and losses will be reported. Therefore, each member of the LLC, if there are multiple members, must file a 1040 tax return and then attach a Schedule E.
Is It Beneficial To Create An LLC For Your Business?
It can be very beneficial to have an LLC attached to any business. That is because it can provide you with asset protection. For example, if you are sued by a prior customer, and they would like to access your personal assets because you are a separate entity from the LLC, they cannot approach them. It is for this reason that there are so many limited liability companies being formed by people and companies all over the states. If you form one, there is a certain procedure that you must go through which differs depending upon the state you are in. In Washington state, you must register your LLC name, find a registered agent, and then file the Certificate of Formation. If you want to, you can also create the Operating Agreement. In regard to taxes, you definitely need to have your EIN number. Finally, if your business has made more than $12,000 in revenue, you must register with the Washington Department of Revenue.
Final Thoughts Regarding Washington State LLCs
Now that you understand a little bit more about taxes and LLCs in Washington state, it might seem slightly overwhelming. If you have never had to submit different tax forms because you have a sole proprietorship or even a partnership, you will certainly need to do some research. It can be helpful to speak with businesses that work with individuals that have recently set up limited liability companies. This business may also set yours up if you do not have one. There are tax benefits associated with having an LLC if you are in Washington state. You can easily set one up yourself, or you can seek out the help of businesses that can do this for you.
If you set up an LLC for your business, you must comply with all of these tax laws. If you don’t, you could face stiff penalties. Although it’s easier to simply have a sole proprietorship, if you are working with an accountant that can help you, they can make this process much easier as you are running your business. The other option is to work with a business that sets up LLCs. They can also help make sure that forms that must be turned in throughout the year are submitted. If you would like this type of extra help, look for a business in Washington that can help you. This will be one of the best investments that you can make if you want to set up and properly manage an LLC in Washington state.