Discussion:LLC Owners that are employees-payroll?
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Discussion Forum Index --> Tax Questions --> LLC Owners that are employees-payroll?
| 24 June 2007 | |
| hi, I have a small business that has 3 equal partners in a multi member LLC. We will all be working for the business providing a service. do we all go on payroll or do we all draw from the business.
please help. thanks | |
| 24 June 2007 | |
| LLC Issues. | |
| June 24, 2007 | |
| No payroll. Guaranteed payments. No payroll filings, you pay your SE/SS taxes on your 1040's along with all your other taxes. | |
| 24 June 2007 | |
| JR1, you are assuming they accept the default tax classification and didn't check the "stupid" box. If they checked the "stupid" box, they need to pay payroll. | |
| 24 June 2007 | |
| i'm sorry- We are new to this. What is the "stupid" box. Our business isn't quite open yet (in 2 weeks)and we haven't started a draw or payroll yet? So, JR1 are you saying that even though we are employeed owners we should be filing as independant contractors OR self-employeement. I'm confused over the form -(among many other things, obvisously!!)you said 1040, so no 1099-M?
PLEASE BEAR WITH ME--THANKS SO MUCH. All input very much welcome! kim | |
| 24 June 2007 | |
| File as a partnership using form 1065 with K-1 going to each partner. I believe the stupid box would be on form 8832 (an election to file as a corporation). By default you will file a 1065. Each partner will pay SE tax on his SE income from the K-1 - it is reported on each of their 1040's. Sounds like you should visit a professional tax preparer. | |
| 24 June 2007 | |
| JR1 can you confirm please?
However it is my understanding that instead of filing Form 8832, an LLC can file form 2553 and be a LLC taxed as an S-corp and thus pay a 'reasonable salary' to the 'owner employees' and file an annual Form 1120-S Thanks ! | |
| 24 June 2007 | |
| If the LLC elects to file as a partnership, the members do not get a salary. They get a guaranteed payment. Each member is resposible for their own taxes. They would have to pay estimated taxes that would cover income taxes, and both parts of the fica and medicare tax.
If the LLC elects to be taxed as a corp, then each member would be on p/r. All required p/r taxes w/b w/h. The entity would also need to pay futa and state unemployment as well as w/c and dbl. You would set up p/r accts with both the IRS and the state. | |
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