ForumsTaxes and Payroll

First, lets cover terminology, LLC is a legal classification, not a tax classification. LLCs are not recognized entities for IRS purposes. The IRS will automatically classify an LLC as another type of organization for taxing purposes - in you case, from what you have described, they would probably classify you as a partnership for tax purposes.

In a partnership, all income is passed through to the owners persoanl income tax.

As an LLC, you can elect to be taxed as a corporation, and then file for a "S" corp. election.

This would give you the benefit of paying yourselves reasonable wage to run the business and reporting any extra profit (after wages) as additional income on your personal tax returns. The benefit being you would not pay payroll taxes on the full income of the business.

Do a search as this topic has been covered several times in the forums.

Best of Luck,
Greg