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    5 Replies Latest reply on Jun 8, 2010 3:38 PM by Teaspiller

    Single Employee LLC

    askreddy Newbie

      Hi

       

      Iam going to start an LLC. And I will be the employee working for this LLC.Following are my questions.

       


      1) Do I need to get earnings by working on corp-corp for my company?

       

      2) If I get income on 1099 then can I deposit the money as the company income and get some salary for that.
      (Say If I get 120K on 1099 and gives me 80K as salary..)

       


      3) Can Some one pls give me an advise one how much I need to pay taxes.

       


      Thanks
      Sree
        • Re: Single Employee LLC
          SeattleSomers Newbie
          As a single member LLC you will file your taxes on the Schedule C and self employment will be calculated from lyour input. (This will serve as your "social security" which otherwise showed up on your W2 when you were employed by another company. You can't go wrong by estimated 20% f- 25% or taxes. And if you want more back at end of year, you can increase that amount accordingly. Be sure to save business receipts and keep a log of business mileage, or the IRS can disallow your deduction if you have no support detail.
          Congratulations on your new business!
            • Re: Single Employee LLC
              askreddy Newbie
              Hi

              If I work as a consultant/contractor and paid on 1099.

              Can this earnings can be attributed to my company income.

              An I will take a portion as salary and pay taxes in this as my personal income and other taxes for the company.

              Example: I get 120K on 1099. I get salary of 80K from my company. I will pay regular taxes on 80K as employee and other taxes as company on 40K.

              Thanks
              Sree
                • Re: Single Employee LLC
                  SeattleSomers Newbie
                  You will do work for a company and they will pay you probably in a check. It will be written to your company name. You deposit it into your company checking account. You can set yourself up as an employee although it is not the common procedure. At year end, you calculate how much you have taken from the company via written checks each month. Each quartre you should make estimated payments to the IRS to cover your withdrawals so you do not owe over $1,000 in taxes at year end or you may have a penalty to deal with! You will not cut yourself a Form 1099 however. You use that form if the company pays over $ 600 to an independent contractor.
              • Re: Single Employee LLC
                bm911tax Adventurer
                Yes, you can setup the LLC to be taxed as C Corp or S Corp, or Schedule C for that matter. LLC is a legal structure, and when it comes to taxes there are several different options for this LLC to be taxed. Unfortunetaly you are not providing enough information to steer you on the right direction. So I will try briefly outline the difference between 2 types of taxations in LLC

                Corp (C or S)
                Checks are written to the LLC name.
                You must be on the payroll as an employee of the LLC and you should receive a reasonable compensation from the LLC. The LLC will withhold all of the payroll taxes for you. LLC will file a separate corp tax return and will give you a W2 at the end of the year.
                Depending on the state of formation of the LLC, you will need to obtain works comp and disability insurances
                There are different tax rules between C corp and S Corp when it comes to distributions (I will not get onto this...)

                _Schedule C or also know as sole-proprietor
                Checks are written to the LLC name
                You can then write yourself a check form the LLC bank to your personal bank
                You will be responsible for quarterly estimated tax payments
                At the end of the year you will only file your personal tax return

                So I hope that this was helpful, but I do strongly recommend getting help form the tax accountant, I can tell you horror stories when people try to do this themselves, but shortly find that they are in a huge mess and non compliance with the IRS and State governments.

                -Ben
                http://www.taxbizpro.com/
                • Re: Single Employee LLC
                  Teaspiller Wayfarer
                  Definitely have to agree with Ben on this one. It seems like a basic decision, but it's important to understand the specific tax implications for your business based on the structure you decide on. You should also absolutely hire a tax accountant to take care of your books and provide you with a business specific checklist of things you need to track for taxes. Even if you decide not to keep a tax accountant on retainer, you should definitely hire one at the beginning to help you set up your books for tax purposes and management. Otherwise, you'll be one of the millions of small business owners who don't properly record income and expenses, and then later get into trouble with the IRS. It's just not worth the headache!

                  -Stephen
                  www.teaspiller.comhttp://www.teaspiller.com