Why Most LLCs Generate K-1 Forms

Are you the owner of a LLC that has multiple members? In that case, you probably distribute a K-1 form every year to your owners or shareholders. The purpose of a K-1 form is to outline each co-owner’s portion of the year’s income, loss, and deductions, and all of those people will need this form in order to complete portions of their personal tax returns.

And you thought credit card processing and merchant accounts were complex? Wait until tax time. As an owner of a LLC, it’s important to report net profit or loss. Additionally, however, if you have other owners/shareholders, some of this financial data must be tracked individually. If you have a LLC with multiple members, you can file your taxes as a partnership, an S corporation, or a C corporation for tax purposes. If you choose an S corporation, you must distribute K-1 forms to each member.

A Schedule K-1 is similar to a W-2, which is the end-of-the year income statement that employers send to their employees for tax purposes. A LLC or S corporation does not pay taxes, with the understanding that they will follow the tax code under Subchapter S. What this means is that an S corporation distributes its profits or losses to owners or shareholders (through Form K-1) who then report them on their personal tax returns. A LLC that just has one member requires that one member to report the LLC’s profits and losses on his or her own personal tax return.

If you are receiving a K-1 form, it is important to know where to input all the information. The information on a K-1 form must be placed in the correct spots on Schedule E (Supplemental Income and Loss). Then all of the Schedule E data is input into your personal Form 1040 on Line 17.

As your business grows, it will likely get more complex; as you master those tasks like credit card processing or partnerships or merchant accounts, it might be time to start hiring a tax preparer to help you before April comes and it’s time to file your taxes.

As the owner of a LLC, educate yourself. If you’re the only owner, you just have yourself to worry about when tax time rolls around. But if you have co-owners or shareholders, know that they will probably require a K-1 form in order to complete their personal taxes.

Leave a Reply



It took me a while to decide who I wanted to settle with to handle all of my credit card transactions because every company wants to make it sound like they're offering you the best rates. CreditCardProcessing.com was able compare and beat all of the other offers I received. They were also able to provide me the fairest price on my EMV-compliant terminal. My sales representative and the support team were there to assist every step of the way. Ultimately, I'm looking forward to a long term relationship with this company.

Roland Tran from the Hong Kong Kitchen

It is a pleasure dealing with these folks. Their pricing is fair, their statements are understandable and their employees are knowledgeable and friendly.

John MacMillian from the Great Lakes Baking Company

The service was very professional, my sales person (Steven B.) was very well versed in the product and most helpful in getting our company set up to accept credit cards via my cell phone. Their rates are some of the lowest on the market and their service is unparalleled. I will recommend them to anyone requiring a credit card processing service.

Michael Harper from Deluxe Auto Body

Jonathan C. is wonderful to work with. He is very helpful, accommodating and resolves any issue quickly. It is hard these days to find someone who gives great customer service, but I can say, Jonathan is the best! I would not hesitate to recommend him to any business owner and to assist you in helping to grow your business.

Linda Garner from Regali Da Forno

I called indecisive about getting a device, but speaking to your Sales Consultant completely settled me. He was very professional, knowledgeable and patiently walked me through the process. He always responded to my voicemails and answered all my questions. After I received my merchandise, he called following up to ensure that I had received it. Customer service I would say is 5 stars. Stellar! Thanks Credit Card Processing, I will definitely recommend you.

Sarah Morgan from Vision International Ministries
Call Us Today! (866) 837-0751

© 2016 CreditCardProcessing.com. All rights reserved. Privacy Policy
CREDITCARDPROCESSING.COM, LLC is a registered ISO of Wells Fargo Bank, N.A. Walnut Creek, CA

*Further terms and conditions may apply. Promotion contingent upon CreditCardProcessing.com's receipt of written competing offer(s).

**Certain restrictions may apply.

Promotional offers brought to you by CreditCardProcessing.com.

Call (866) 837-0751 for details.