Louisiana LLC Taxes

How Is an LLC Taxed in Louisiana?

Taxation in Louisiana isn’t applied in the same way to all LLCs – instead, it varies depending on a number of factors, such as an LLC’s nature, locality, and tax election.

While LLCs typically benefit from pass-through taxation by default, they can elect to be taxed as one of the following:

• C Corporations: The LLC is treated as a separate entity to its owners, paying corporate income tax rates on its total profit while the owners also pay personal income taxes on any distributions they take.
• S Corporations: In return for paying owners a “reasonable salary,” the LLC’s remaining profits are distributed among members without a need to pay FICA or self-employment taxes on them.

The following sections go into the various tax responsibilities of your LLC at local, state, and federal levels in Louisiana to help you ensure your LLC navigates them effectively.

Louisiana Local Taxes

If you’re operating an LLC in Louisiana, local taxes can differ greatly based on your location.

Below, we’ll take a look into the most common local taxes your business might face:

Local Option Taxes

Local option sales and use taxes are additional charges levied by localities in Louisiana on the sale or usage of goods and services, over and above the state’s standard sales tax. These taxes can add as much as 7% to the state rate of 4.45%, resulting in a potential sales tax range between 8.45% and 11.45% — depending on where your business operates within the state.

Note: To find out your locality’s specific rate, visit the Sales Tax Portal offered by the Louisiana Department of Revenue.

Automobile Rental Tax

Local governments in Louisiana have the option to impose an automobile rental tax on LLCs operating in the vehicle rental sector. This tax may be up to 0.5%, which, when combined with the state’s 2.5% tax, could result in a total tax of up to 3% for rentals of 29 days or less. 

Distinct from the state’s 4.45% sales tax on leases and rentals of tangible personal property, LLCs in localities where this tax is levied must collect and remit it alongside the standard sales tax and any applicable local option taxes.

Property Tax

Property taxes in Louisiana are calculated based on assessments of both real property, such as land and buildings, and personal property, like machinery. Parish assessors are responsible for these valuations, applying rates of 10% for residential properties, 15% for commercial properties, and 25% for public service properties.  

It’s important to note that oversight of the fairness and balance of these assessments and collections is provided by the Louisiana Tax Commission, ensuring equitable property taxation across the state.

Note: For more in-depth information on Louisiana’s property taxes, see the Louisiana Property Tax Basics resource provided by the Louisiana House of Representatives.

Louisiana State Taxes

Every state has its own regulations and rules that dictate how it taxes individuals and businesses. Below is a list of the most relevant state-level taxes for LLCs in Louisiana. 

Individual Income Tax

LLCs in Louisiana operating under default pass-through taxation are subject to the state’s individual income tax rates. This applies to Louisiana residents, part-year residents, and nonresidents who earn income from Louisiana sources and are required to file a federal income tax return.

Louisiana uses a progressive tax structure. For single, married filing separately, or head of household filers, the rate is:

• 1.85% on the first $12,500 of income
• 3.50% on income between $12,501 and $50,000
• 4.25% on income over $50,000

For married filing jointly or qualified surviving spouse, the rate is:

• 1.85% on the first $25,000 of income
• 3.50% on income between $25,001 and $100,000
• 4.25% on income over $100,000

The filing deadline for these taxes is typically May 15 for calendar year filers or the 15th day of the fifth month following the close of the fiscal year for fiscal year filers.

Corporation Income Tax

LLCs opting for C corporation taxation in Louisiana are subject to specific corporate income tax rates. As of January 1, 2022, these rates are:

• 3.5% on the first $50,000 of net income
• 5.5% on the next $100,000
• 7.5% on any amount over $150,000

For LLCs taxed as C corporations, filing a Corporation Income Tax return in Louisiana is mandatory, regardless of net income levels. The filing and payment deadline is the 15th day of the fifth month following the close of the accounting period, typically May 15th for those on a calendar year.

Moreover, there is an entity-level tax applicable to pass-through entities, including LLCs electing S corporation status. As of January 1, 2022, the rates for this tax are:

• 1.85% on the first $25,000 of net income
• 3.5% on the next $75,000
• 4.25% on amounts over $100,000

Note: This entity-level tax is applied to the LLC’s income before it is distributed to its members.

Franchise Tax

For LLCs classified as C corporations in Louisiana, the franchise tax is calculated based on the corporation’s capital employed within the state, encompassing either the net worth or total capital, such as stock and surplus. The tax structure includes:

• A minimum tax of $110 for entities with capital up to $300,000.
• A tax rate of $1.50 for each $1,000 or major fraction thereof for capital exceeding $300,000, with an additional branch fee at the same rate for capital over $300,000 used in the state.

LLCs taxed as C corporations must file the franchise tax return annually, with the deadline typically in the fourth month following the taxable year’s end.  

Hazardous Waste Disposal Tax

For LLCs operating in Louisiana and engaging in activities involving hazardous waste, understanding the specifics of the state’s Hazardous Waste Disposal Tax is crucial. This tax applies to both the generation and disposal of hazardous waste within the state. Here’s a breakdown of the applicable tax rates:

• $30 per dry-weight ton for waste generated and disposed of at the same site.
• $40 per dry-weight ton for waste disposed of at a different site than where it was generated.
• $100 per dry-weight ton for extremely hazardous waste.

LLCs need to file tax returns and make payments for this tax by the 20th day after the end of each taxable calendar quarter.  

Note: Keep in mind that if hazardous waste is brought into Louisiana from another state, the tax rate will either match the Louisiana rate or the rate of the originating state, whichever is higher.

Retail Dealers of Vapor Products

If your LLC purchases vapor products from suppliers other than Louisiana Authorized Tobacco Wholesalers, you’re required to pay an excise tax of $0.15 per milliliter. This necessitates filing a Tobacco Tax Return using Form R-5608, with the tax payment due by the 20th day of the month following the taxable sales month. 

However, if your LLC exclusively buys from authorized wholesalers who have already paid the tax, you are exempt from this additional filing and payment requirement.

Note: For information on registered Louisiana Authorized Tobacco Wholesalers, which could help you bypass excise taxes on vapor products, visit the Office of Alcohol and Tobacco Control’s website.

Sales-Related Taxes

LLCs in Louisiana involved in selling, leasing, or renting tangible personal property or providing taxable services must adhere to the state’s general sales & use tax regulations. These businesses are required to obtain a sales tax certificate, enabling them to collect and remit the applicable taxes. 

The current state sales tax rate is 4.45%. This rate applies to the sales price of taxable transactions and to the cost price in use tax situations. To stay compliant, your LLC must file sales tax returns and make the required payments by the 20th day following your reporting period’s end.

Federal Taxes

Regardless of where your business is located, if you run an LLC in the US, there are a number of federal taxes you’ll need to pay. Below are some of the main types your LLC may be required to pay for federal tax purposes:

Income Tax

By default, the IRS will not treat single and multi-member LLCs as a separate entity from you for tax purposes. What this means is that you’ll need to report your share of your LLC’s profits on your individual tax returns and pay federal income tax on them at the personal rate of your tax bracket.

Having said that, keep in mind that LLCs can also elect to be taxed as C corps or S corps, which changes how these taxes are levied in different ways.

Self-Employment Tax

In addition to income tax, members of single- and multi-member LLCs will need to pay self-employment tax on the share of the business’s profits that they report on their personal tax return at the end of the year.

This tax is levied at a flat rate of 15.3% against businesses with net earnings that exceed $400, though it is applied slightly differently to LLCs that have elected to be taxed as S corps or C corps.

Employment Tax

If your LLC hires any employees, it will need to withhold a portion of their salaries to cover various types of taxes on your employees’ behalf – including Social Security, Medicare (FICA), and payroll taxes.

Furthermore, the members of any LLCs that have elected to be taxed as an S corp will be required to pay employment taxes on their salaries. However, in return for this, the remainder of the business’s profit after these salaries have been distributed will be safe from both self-employment and FICA taxes.

Excise Tax

If your LLC engages in certain types of business (such as the sale of alcohol and tobacco or operating a heavy highway vehicle, among others), it may need to pay federal excise taxes in order to do so legally. Each excise tax comes with its own set of rules, rates, and filing obligations you’ll need to be aware of.

Understanding and fulfilling these federal tax obligations is crucial for keeping your LLC compliant and avoiding unnecessary financial penalties and/or fines.

How to File LLC Taxes in Louisiana

Below, we’ve outlined the general process an LLC in Louisiana will need to follow in order to file their tax return correctly. Note that the specificities of each step will vary slightly depending on how your LLC is organized and the specific locality it’s based in.

Step 1: Gather Your Documentation

To ensure accurate tax filing, thorough record-keeping is essential. Begin by collecting your personal information, including:

• You and your partner’s Social Security number, date of birth, and residential address
• The previous year’s tax returns
• Your LLC’s Employer Identification Number (EIN)

Then, you’ll need to gather all documentation related to your business’s income, such as:

• Invoices you’ve issued
• Sales transaction logs
• Electronic payment reports from services like PayPal or Stripe

Lastly, assemble all records pertaining to your business expenses, which should cover:

• Lease receipts for your business premises
• Bills for utilities
• Records of office supplies purchases
• Documentation of business-related travel
• Payroll records for employees

Note: Depending on how your LLC is organized and its tax election, you may need different information for your tax return. 

Step 2: Find The Right Tax Forms

Once you’ve gathered all necessary documents, the next step is to select the correct tax forms for your LLC based on its organization:

• Single-Member LLCs: The business’s total income and expenses are reported on a Schedule C form, which is attached to the owner’s personal tax return and due by April 15 or the following business day if it lands on a weekend or holiday.
• Multi-Member LLCs: File an information return using Form 1065. Members must fill out a Schedule K-1 showing their individual earnings or losses by March 15 or the next business day.
• C Corporations: File a corporate tax return using Form 1120 by the April 15 deadline or on the next business day if it’s a weekend or holiday.
• S Corporations: Use Form 1120-S for the corporate tax return and distribute Schedule K-1 forms to shareholders for reporting their shares of profits or losses. The deadline for filing taxes using 1120-S is March 15 or the following business day.

Since state and local taxes will have their own individual forms and requirements, we recommend contacting your municipality or hiring an accountant for guidance.

With the appropriate documentation gathered and the correct tax forms for your business entity on hand, you’ll be ready to fill them out and submit them.

Step 3: File Your Taxes

The majority of businesses choose electronic filing for its speed, enhanced security, and reliability compared to paper filing, which can be slower and more prone to errors. Here’s how it works:

• Federal Tax Returns: The IRS provides two electronic services for tax submission: Free File for businesses with an AGI below $72,000 and Free Fillable Forms for those above the threshold.
• State Tax Returns: LLCs in Louisiana can electronically file state taxes using Louisiana File Online, the state’s free web-based service suitable for both income and business taxes.
• Local Tax Returns: LLCs must file local tax returns with the parish or local government where they operate, often using electronic filing options available on parish websites or through the Louisiana Association of Tax Administrators’ portal.

Note: These electronic filing tools are best suited for those who are already confident in handling their LLC taxes as if filling out a paper form. 

For new business owners, we recommend opting for the expertise of a tax professional in order to ensure both accuracy and compliance in your tax filings. 

Recommended: Schedule a free consultation with 1-800Accountant to stay on top of your taxes. 

Keep Your Louisiana LLC Compliant

While LLCs are generally easier to maintain than corporations, there are certain state and local formalities your LLC must satisfy in order to remain compliant. 

Louisiana LLC Annual Report

LLCs in Louisiana must file an annual report with the Secretary of State in order to maintain compliance. The filing process includes reviewing and updating existing information, modifying registered agent details, and adjusting officer/member records as necessary. 

Upon receiving a Renewal Notice, your LLC can file online at the Secretary of State’s website with the provided Charter Number and Renewal ID. The filing fee for the annual report is set at $25. 

Adding a new agent triggers an email confirmation step, integral to the completion of the filing. Delays or noncompliance can result in penalties and may affect the LLC’s standing with the state. 

Note: For the most current fee schedule, refer to this document provided by the Louisiana Secretary of State.

Licensure and Tax Requirements

In Louisiana, almost all businesses are required to obtain various licenses and permits at the local, state, and federal levels. Below, we’ve broken down three of the most common types your LLC may need:

• Sales Tax Licenses: If your LLC sells goods or provides taxable services in Louisiana, you’ll need to secure a sales tax license. This is managed through the Louisiana Department of Revenue. By registering for a sales tax certificate, your LLC becomes authorized to collect and remit sales tax, a key compliance requirement in the state.
• Professional Licenses: Does your LLC operate in specialized fields like healthcare, law, or accounting? If so, obtaining specific state-issued professional licenses is mandatory in Louisiana. These licenses are essential for legal operation and are typically obtained from the respective state licensing boards or agencies overseeing your profession.
• Environmental Permits: If your LLC is engaged in activities that impact the environment, like waste disposal or emissions, it’s essential to obtain the necessary environmental permits. In Louisiana, these permits are issued by the Department of Environmental Quality, and the specific type of permit required will depend on the nature and extent of your LLC’s environmental impact, ensuring your operations comply with regulatory standards.

Note: For a comprehensive overview of potential federal, state, and local licensing requirements for your business, visit the Louisiana Secretary of State’s Business License Checklist.