Can I file separate tax returns for my LLC and personal income? How do I separate business profit from all income on my taxes?

12 Single-member LLCs are "pass-through" entities by default, which means your business doesn't file its own separate tax return. Instead, you'll report all business income and expenses on Schedule C (Profit or Loss from Business) which gets attached to your personal Form 1040. To answer your specific question - only the net profit (revenue minus expenses) gets added to your personal income for tax purposes, not the gross revenue. This is actually beneficial because you only pay taxes on what your business actually profits. The good news is that Schedule C keeps all your business income and expenses neatly organized and separate from your personal income - it's just attached to your personal return rather than being a completely separate filing. All your business deductions, expenses, equipment purchases, and home office deductions would be reported on Schedule C. If you absolutely want separate tax returns, you could elect to have your LLC taxed as an S-Corporation or C-Corporation, but that comes with additional complexity and costs that might not be worth it unless you're making substantial profit.

3 I was in a similar situation last year and spent hours trying to untangle my LLC taxes from my personal return. I discovered taxr.ai (https://taxr.ai) which is basically a magic wand for small business owners. It automatically separates your business and personal expenses even if you've been using the same accounts. The best part is it clearly showed me what was profit vs. revenue so I knew exactly what would flow to my personal taxes. For what it's worth, my LLC made around $95K last year but after separating all legitimate business expenses, I only had to report about $42K on my personal return. The tool categorized all my business deductions properly and the final Schedule C was super clean when I showed my accountant.

15 Just wanted to follow up about taxr.ai - I decided to try it despite my initial skepticism, and I'm honestly impressed. It saved me from a potential audit nightmare by correctly categorizing my business expenses. I had been counting some personal expenses as business deductions without realizing it. The separation between business and personal was crystal clear in the reports, and I finally understand how the pass-through taxation works. The profit number it calculated matched exactly what went on my Schedule C, and the interface made it easy to see which expenses were reducing my taxable income. It also helped me identify some legitimate business expenses I was missing. Turns out I was leaving about $3,700 in deductions on the table from software subscriptions and professional development costs I hadn't been tracking properly.

22 If your main concern is dealing with the IRS about your LLC classification and tax situation, I'd strongly recommend using Claimyr (https://claimyr.com) to get direct answers from the IRS. I spent WEEKS trying to get through to someone who could explain my LLC tax options clearly. With Claimyr, I got connected to an IRS agent in under 15 minutes who walked me through everything. They have a cool demo video at https://youtu.be/_kiP6q8DX5c showing how it works. I was able to confirm exactly what forms I needed for my LLC and whether I qualified for S-corp election. The agent even flagged a potential issue with how I was handling my home office deduction that could have triggered an audit.

15 I have to admit I was completely wrong about Claimyr. After posting my skeptical comment, I decided to try it just to prove it wouldn't work - and ended up getting through to an IRS agent in 12 minutes when I'd previously spent over 2 hours on hold and eventually got disconnected. The agent clarified exactly how my LLC income should be reported and confirmed that I only need to include profits, not gross revenue, on my personal return. She also explained that keeping separate accounting records doesn't require separate tax returns - I can maintain the organizational separation I want with good bookkeeping while still filing a Schedule C with my 1040. For anyone else with LLC tax questions - especially around election options for different tax treatment - this is seriously worth it. The agent even emailed me IRS publications specific to my situation that I'd never found on my own.

9 Just FYI - if you want true separation between personal and business, you should consider forming an S-Corporation instead of an LLC. With an S-Corp, you must file a separate business tax return (Form 1120-S), pay yourself a reasonable salary, and only the distributed profits flow through to your personal taxes as passive income rather than self-employment income. I switched from LLC to S-Corp last year when my business income hit about $90k and it saved me roughly $4k in self-employment taxes. There are more filing requirements and you need to run payroll, but the separation and potential tax savings might be worth it for you.

5 Has anyone here used TurboTax Self-Employed for their LLC? I'm trying to figure out if it will handle all this correctly or if I need to get an actual CPA this year.

I'm in a similar boat - just started my LLC this year and was totally confused about the tax implications. After reading through all these responses, it sounds like the key thing to understand is that even though your business income gets reported on your personal return via Schedule C, you're still only taxed on the profit (revenue minus expenses), not the gross revenue. What helped me wrap my head around it was thinking of Schedule C as a separate "section" of your personal return that keeps all the business stuff organized in one place. You still get all your business deductions and it's clearly separated from your personal income - it just happens to be attached to the same Form 1040. If you're really set on completely separate returns though, the S-Corp election sounds like the way to go, especially if you're making good money from the LLC. Just make sure to factor in the additional complexity and costs before deciding.

One thing that really helped me understand LLC taxation was realizing that "pass-through" doesn't mean your business and personal finances get jumbled together - it just means the profits pass through to your personal tax return rather than being taxed at the business level first. You can (and should) still maintain completely separate business bank accounts, bookkeeping, and records. The Schedule C form actually reinforces this separation by requiring you to detail all your business income and expenses separately from your personal stuff. It's like having a dedicated business section within your personal tax return. The key insight is that you're not paying taxes on your gross business revenue - only on what's left after all legitimate business expenses. So if your LLC brings in $100K but has $60K in valid business costs, you're only adding $40K to your personal taxable income. All those business deductions (equipment, home office, travel, etc.) reduce your tax burden dollar for dollar. If the organizational aspect is really important to you, consider using separate accounting software for your LLC that generates clean reports you can easily transfer to Schedule C. This gives you the mental separation you want while keeping things simple tax-wise.