Welcome. Do you or your partner have an accountant who does your personal taxes??
Maybe now is the time, you talk to your accountant for advice.
Remember, Accountants are in the business of helping business people
No we dont. I was hoping someone had a similar situation. Thanks
We are a small LLC consulting company with 2 members (partners), no employees. In the past we have never taken a "guaranteed payment" since we don’t know how our business is going to turn out for the year. At the end of the year we do split the net profit (50% - 50%) on our K1's but leave it in the business to reinvest. It is pretty rare that we take a draw.
We do have regular full time jobs and contribute to our company's 401k. Now we are thinking about starting up a SEP plan as we max out our full time job 401k contributions. I see that you can contribute to a SEP and 401k.
My questions are:
- SEP is based on 25% of your business compensation. Is that 20% off the "Guaranteed Payments”?
- Can our SEP be based on the 50% - 50% net profit split?
- Is it better to do "Guaranteed Payments" and what is the best way to estimate it if you do not know how your year is going to turn out?