File Form CD-405 with the Department of Revenue. Corporations are also taxed by North Carolina at a rate of 5 percent of annual income and must pay a franchise tax each year. This requires the LLC to file a separate federal income tax return each year. To choose corporate tax treatment for your LLC, file IRS Form 2553. Although some states require the LLC to pay income tax at the corporate level, this is not the case in NC. The LLC itself does not pay corporate income tax. With this tax structure, the LLC's profits and losses are reported on each owner's individual income tax return. An LLC also has the flexibility to be treated as a partnership, corporation, sole proprietor, or S corp by the IRS. At the federal level, an LLC is a pass-through entity, which allows it to avoid the double taxation that affects corporations. LLC taxes in NC are the taxes that a limited liability company must pay to the state of North Carolina.
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