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    2 Replies Latest reply on Aug 14, 2014 10:21 AM by Glenn Lyon, Esq.

    Personal Income and Business Taxes

    thistooshallpass Newbie

      As an individual, I am making just over 100k in my regular 8-5 and part time jobs.

      Plan is to eventually quit one of the two.

      I am looking to start a business/single member LLC in a few weeks.

      As an LLC, I understand that I will have to pay 2 forms taxes via schedule C - in the ball park of 20 and 15%.

      Will the taxes I pay be based on a combination of the income from the business AND my personal income - therefore paying more or I be taxed differently? As in paying taxes as an employee and paying taxes as a business owner?

        • Re: Personal Income and Business Taxes
          LUCKIEST Guide

          Welcome to the community. Good set of questions.

           

          As a accountant, I have always suggested that a person going into business

          should have a personal accountant who knows you and your background.

          Also have a good relationship with both your lawyer and your banker.

           

          And lets not forget a good business plan.

           

          Good luck, LUCKIEST

          • Re: Personal Income and Business Taxes
            cpajoe Scout

            Thistooshallpass: You are correct that a single member LLC will be subject to two types of taxes. One is an income tax on the profits of the business, paid on your personal tax return along with taxes due on your other personal income. That rate will depend on your taxable income on your personal income tax return. The second tax is an employment tax on the business profits, which can be in the range of 15 % as you suggest. However, with 100K in income from your regular and part time jobs, you probably will have paid in most of the employment tax represented by social security tax. If you are working with a CPA that individual can do a projection for you of estimated tax liability based on your particular circumstances.

            • Re: Personal Income and Business Taxes
              Ranger

              Hello! Welcome to the community!  You ask some valid and important questions and I see you are already getting responses from others. Please come back often and let us know your progress.

               

               

              Have you also posted an introduction to the Community? If not, please  take a little time to visit and post in theIntroduce Yourself area.


              Here's looking forward to hearing more from you!


              Joleen

              • Re: Personal Income and Business Taxes
                Glenn Lyon, Esq. Wayfarer

                Note that you can avoid some of the self employment tax by electing to be taxed as a Subchapter S corporation.  However, your income form the LLC has to be sufficient enough to justify some additional administrative costs, mostly the cost of preparing and filing a corporate return for the LLC.  The IRS requires that you pay yourself a "reasonable salary" before distributing profit as a dividend, which dividends are not subject to self employment tax.