Form 5472 + 1120 for LLCs Explained & Top Other Forms You’ll Most Likely Need to File

Planning to start an LLC (Limited Liability Company) in the USA? You better get ready to deal with one of the most bureaucratic systems in the world.

At first, it’s perfectly normal to feel overwhelmed with the wide variety of forms and requirements in terms of paperwork, but once you get used to it, it becomes a breeze.

There are certain documents you need to learn about to ensure you meet all the regulations. While the list may vary based on the type of business or industry, here are the most common forms and what each of them requires.

Understanding Articles of Organization​

This is the first form you’ll have to pay attention to. The form will basically create your LLC and register it with the Secretary of State. Obviously, before doing it, you'll have to do a bit of research, such as decide on the business name, checking if it's available and figuring out what permits you may require.

But all in all, until this form is complete, you won’t be able to trade as a business, regardless of what you want to do. It’s the first thing to consider.

You’ll need a few details for this form, such as the name and address of your business, contact details for your registered agent, names and addresses of members of your LLC, the name of the incorporator and the purpose of your company.

Becoming Familiar With the Operating Agreement​

Now, this document is not always required. It’s important, but many states don’t make it a mandatory form requirement. It depends on where you’re incorporating. If you do it in California, Delaware, Maine, Missouri or New York, it’s a legal requirement.

In other states, the agreement is not needed, but it's still important and would help to do it.

It also includes some details about your business, such as members of the LLC and how much of the company they own, rules and procedures of your company, who contributed to starting the company, how losses or profits are distributed or what happens if one of the members decides to leave.

How About the Annual Report?​

Most states will require this report on a yearly basis. Some states require it every other year, while a few of them don’t require it at all. Make sure you’re familiar with your state’s regulation. Failing to file the report may cause your company to be dissolved.

The overall purpose is to inform the authorities about your activities, but also to notify them about business changes, such as locations, directors or managers. The report also notifies shareholders about your financial performance.

This report can be filed on the state’s official website and comes with fees, which vary from state to state, anywhere between $50 and $400.

The “Doing Business As” Form​

Deciding on a business name is not everything. This part must clearly be mentioned in the Articles of Organization. But then, most businesses don’t trade under their legal names. Instead, they find something easier for their clients to remember.

For instance, you could sell furniture and have your legal name Bespoke Furniture Manufacturing LLC, but you could also trade as Bespoke WOW. If you trade under a different name, you'll need to mention it to the Secretary of State.

Such forms have different names depending on the state you're in. You'll usually find them as “Doing Business As”, “Trade Name”, “assumed Name” or even “Fictitious Name”.

Changing Your Registered Agent, Another Form​

The registered agent is usually a self-employed professional or perhaps a company that will represent your company. They can fill out some forms for you, but they'll also get letters and other documents on behalf of your company.

Every LLC requires a registered agent. You could be your company's registered agent, too if you have the expertise and skills. Otherwise, it’s not really a good idea.

Whether you're not happy with your current agent, you decide to hire someone instead of doing it yourself, or the respective business is no longer active, you'll need to inform the state of this change. And just like you might've guessed already, you’ll have to complete a form.

Such forms are also available on the state’s official website.

How About Sales Tax Returns?​

Trading without charging sales tax is nearly impossible for any LLC out there. It makes no difference what kind of business you do.

Now, based on where the business is incorporated, laws and regulations will vary widely. However, you’ll still have to use a form and notify the Department of Revenue about your total sales, as well as the tax you’ve managed to collect. Based on this form, you’ll make a payment of your own sales tax.

Do You Need a Business License or Permit?
Almost every business out there will need some sort of permit to run. Such licenses clearly vary, as it depends on where your business is, what it does, what you sell and so on.

For example, if you deal with goods regulated by the federal government, you’ll most likely need a federal license. Such industries include agriculture, aviation, alcohol or firearms, among others.

Some of the licenses and permits you may need include professional licenses for services like accounting or medicine, permits for certain areas, selling tobacco or alcohol, property alteration services and even health licenses for businesses involving food.

Fire inspections and licenses may also be needed for such risks.

What Are the Main Tax Forms for the LLC?​

The forms you’ll need to file with the IRS are among the most significant ones. The same goes for the Department of Revenue in your state. Again, such forms depend on the nature of your business and trade.

Unless you know what you’re doing, it might be better to discuss your forms with an accountant. After all, the IRS is not to be messed about with.

There are three main tax forms for the LLC.

Form 1040 is for a disregarded entity, pay special attention to Schedule C, C-EZ, E or F.

Form 1065 is mandatory for partnerships.

As for form 1120 or form 1120S, it’s needed for a corporation.

Who Needs to Complete Form 1120?​

Form 1120 is used by domestic corporations. It’s needed to report the income, gains or losses, as well as potential deductions and credits. The same form is used to help determine the income tax liability. There are various changes affecting this form on a regular basis, so make sure it’s always updated.

Over the past few years, it’s experienced a few changes as well:

• Penalty for those who fail to file has been increased.
• Form 1120-W has been eliminated.
• The alternative minimum tax is new.
• The principal business activity codes have been upgraded.

The form is available on the IRS official website. Unless they’ve been declared exempt by section 501, every domestic corporation must file form 1120. Corporations in bankruptcy also have to do it. Even if there’s no taxable income, the form is a must.

When it comes to LLCs, an entity with more than a single owner will be treated as a partnership and should get form 1065.

But then, single-member LLCs must get form 1120, only after filing form 8832, too if the owner wants it treated as an association that can be taxed as a corporation.

Form 1120 can be completed electronically as well.

When Do You Need to File Form 1120?
The last day to file is the 15th day of the 4th month after the tax year has finished. The same rule applies to well established corporations, as well as corporations that have dissolved or even new corporations filing short-term returns.

If the fiscal year ends on the 30th of June, you only have until the 15th day of the 3rd month.

In any of these cases, if the due date is a weekend or a legal holiday, you’ll have until the next business day.

The EIN Requirement for Form 1120
If you’ve registered the LLC as a corporation, you’ll require an EIN in order to file taxes. This is another form to go through.

The LLC must get an EIN (Employer Identification Number). This number is unique and only associated with your business, it’s an identification number. It will be used for all your tax returns and transactions, as well as over official letters.

Form 2553 for Lower Self-Employment Tax​

Form 2553 can help you pay less tax, but it only works under certain circumstances. It will save money on the payroll tax. The so-called S Corporation Tax Election is a must when going down that path. While you’ll get the tax bill lower, you’ll also notice the administrative overhead going slightly higher.

This self-employment tax won’t affect other taxes.

The previously mentioned form 1120 will also have an alternative if you count as an S corporation. Instead of form 1120, you’ll need to complete form 1120S.

Form 1065 Against Form 2553
Choosing to avoid form 2553? No problem. But if there are more people running your LLC, you’ll have to file form 1065. This is known as a partnership return.

A similar form must be filed with the Department of Revenue in the respective state.

Form 1040 for Individual Tax Returns​

This form for individual tax returns must be filed whether your LLC runs as an S corporation, partnership or sole proprietor.

Once completed, the form will require multiple attachments and schedules to prove earnings associated with the LLC.

What Are Payroll Returns?
As an employer, you must submit various reports to the IRS every now and then. For example, monthly returns or quarterly returns might be required, not to mention the more common W-2 and W-3 yearly returns.

Pay stubs must also be given to employees.

What Are Estimated Taxes?
Estimated taxes must be paid four times per year. As the LLC owner, you need to do it to both the IRS and the state, separately.

Estimated taxes for the state will cover earnings. Federal estimated taxes cover payments related to self-employment, as well as federal tax liabilities.

Failing to pay these taxes will lead to penalties. Plus, interest will add up on the tax you owe.

Form 5472 for 25% Foreign-Owned LLC​

Form 5472 was originally used for corporations in the USA only. The IRS has updated it, so it covers LLCs as well. The update is not complete, so this form comes as an attachment to form 1120, rather than by itself.

To file form 5272, your LLC requires an EIN. Also, the 15th of April is the last of the year to file it.

How to Complete Forms 1120 and 5472​

Completing both forms is a bit challenging if you’ve never done it before. First of all, complete form 1120, but just the first part, which includes identifying information and contacts. Don't bother about the parts, including tax related information, like deductions or returns.

This second part is transferred to form 5472 and comes over three different sections.

First, you need the overall value of your LLC by the 31st of December.

Second, you need the amount of money moved from the non-American owner to the company in the respective tax year.

Third, you’ll need the amounts of money moved the other way around, from the company to the owner, over the same time frame.

Form 5472 should also include the non-American taxpayer number for identification. You’ll have to do this for the owner of 25% of the company.

Unlike other forms, this one can’t be filed electronically. You’ll have to mail it or simply fax it.

Top 10 Registered Agent Services in the USA​

Filing the required forms for the first time is the most challenging part of the process. You only need to do it once, though. However, if you're new to it, it can be confusing. Rather than pay hefty fines, most business owners simply hire accounting services to get the job done for a fee.

Here are a few nationwide registered agent services that can help in the process. Keep in mind that you’d still have to research your options and determine which one is more suitable for you, whether in terms of services or prices.

• Rocket Lawyer provides access to more legal services and has a good reputation, but beware, there are no notifications regarding pending filing deadlines.
• Northwest Registered Agent has reasonable prices, good customer support and free email forwarding, but it’s slightly slower than other services.
• ZenBusiness will give you good offers for your first year with them and has excellent legal services, yet addon services can be expensive.
• LegalZoom offers credit monitoring and excellent customer service seven days a week, but it’s pricier than other alternatives.
• Incfile will automatically forward legal documents to you, but you may experience relatively slow customer service.
• Harbor Compliance has affordable fees and specializes in highly regulated services. It offers no refunds if you're unhappy with the service or you change your mind, though.
• Inc Authority has careful and experienced registered agents and a quick turnaround time, but renewal plans might be expensive.
• SunDoc Fillings offers nationwide services and same day processing, but such convenience comes at a price.
• Incorporate.com has a superior CSC navigation tool and offers access to documents on a 24/7 basis, but expedited filing services are missing.
• Swyft Fillings is affordable and straightforward to use, but customer service is not available on weekends.

Bottom line, while LLC forms are a bit confusing at times, the documentation offered by the government is quite detailed. Sure, for a first time user, it could be a challenge going through everything, hence the convenience of just hiring a registered agent instead.

Fees are affordable overall, but make sure you’re aware of every expense for addons, as they can add up too.

 

[troubled soul]

Thanks a lot for this Guide

 

[ImKing]

Your awesome, very helpful

 

[Cloudbanck]

Thanks! Just one comment on the sales tax. I think it is applied on state and local level, but not all states have a sales tax, and it is applied on tangible goods sold to retail. So unlike VAT it does not apply to B2B.

 

[ImKing]

Thanks for this brilliant guide, came very handy.

Thanks! Just one comment on the sales tax. I think it is applied on state and local level, but not all states have a sales tax, and it is applied on tangible goods sold to retail. So unlike VAT it does not apply to B2B.

thanks for the info.. admin may adjust it.

 

[I'mRobot]

Thanks a lot for this guide!

 

[myhand]

Nice read up, I'm sure it is going to help the many asking for the problems they have for their tax filing for their US LLC

 

[blizz]

great article for explaining filing taxes in their us company. I found many threads about the topic this article may help them all.

 

[cuno]

very helpful.

 

[myhand]

In my opinion people should read this article when they file for a company registration in the US. Be prepared and get things done before others come and get things done for you.

 

[JackAlabama]

In my opinion people should read this article when they file for a company registration in the US. Be prepared and get things done before others come and get things done for you.

Yah indeed, with a good agent, they will take care of this and even compile the form.

 

[withouthause]

Are the dividend gain for the LLC treat as domestic capital gain if the company that pay the dividend is a US company?