Not an accountant, but we have an LLC that we file as a partnership

Jan 10, 2019
11:38:13am

haYnCoug 3rd String

We give ourselves a k1 with pass through income and on our personal return we get hit with the high amount of self employment taxes (ss and Medicare). So you still have to pay the tax with an LLC.

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haYnCoug

Bio page: haYnCoug
Joined: Feb 23, 2011
Last login: May 3, 2024
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Messages

Author

Time

Question about LLC and taxes for you accounting gurus.

IrishBlue

1/10/19 11:30am

You have to pay yourselves a reasonable wage.

Ozymandias

1/10/19 11:33am

So I can't just write myself a check at the end of the month for 2k

IrishBlue

1/10/19 11:35am

If it were that easy to avoid FICA, we would all house our labor in an LLC.

Ozymandias

1/10/19 11:41am

This is incorrect. He is talking about an S-corp.

RexIdaCoug

1/10/19 11:48am

Guaranteed payments are still subject to FICA.

Ozymandias

1/10/19 12:07pm

Did I say they weren't? Wages should not be paid to owners of an LLC unless

RexIdaCoug

1/10/19 12:26pm

Well, I covered the S Corp issue elsewhere and since he was talking about

Ozymandias

1/10/19 12:28pm

Reasonable wage generally isn't an issue for an LLC. That is why.

RexIdaCoug

1/10/19 12:29pm

It is for an LLC that elects to be taxed as an S-Corp.

Ozymandias

1/10/19 12:31pm

Not an accountant, but we have an LLC that we file as a partnership

haYnCoug

1/10/19 11:38am

The LLC is a passthrough entity for tax purposes. You just ignore that it exist

DirtyWater

1/10/19 11:39am

Not necessarily true for an LLC that elects to be taxed as an s-Corp.

Ozymandias

1/10/19 11:41am

So if I am only making 5-10k a year, doesn't it make more sense to use the LLC

IrishBlue

1/10/19 11:44am

Probably so. It is only worth setting up a entity taxed as an S-Corp if the

Ozymandias

1/10/19 12:13pm

S-corps also are passthrough entities. I think you mean C-corp and that

DirtyWater

1/10/19 11:49am

If you are an SCorp you can pay yourself a reasonable salary and then if you

Ozymandias

1/10/19 12:08pm

Also I believe this is only true for single-member LLCs.

CougarBreath

1/10/19 11:43am

Nope. Still a passthrough entity. If you have multiple owners, they split the

DirtyWater

1/10/19 11:53am

You still have to file a 1065 partnership return. The word pass through is only

JAGA97

1/10/19 12:04pm

you need professional advice

lukeskywalker

1/10/19 11:44am

Yeah, my normal tax accountant is on vacation, but I was hoping to take care

IrishBlue

1/10/19 11:45am

Your tax software walks you through it. Pretty simple actually.

ClackamasCoug

1/10/19 11:58am

If you file as an LLC partnership as stated in your scenario you will file a

JAGA97

1/10/19 11:58am

Good to now about the business liability insurance. Probably overkill for our

IrishBlue

1/10/19 12:10pm

This is correct. The corporate veil protects owners of an LLC or corporation

BYUMizzou

1/10/19 12:49pm

Is this generally the case for a PLLC as well?

RexIdaCoug

1/10/19 1:07pm

yes. PLLC are generally limited to specific professions

BYUMizzou

1/10/19 1:38pm

<< Deleted >>

coolblue

1/10/19 12:39pm

You have some of it right, and some of your questions depend on whether you set

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