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

Jan 10, 2019
11:41:02am

Ozymandias All-American

Once you can establish a reasonable wage has been paid, excess profits of an s-Corp may qualify for not being subject to FICA.

This message has been modified

Originally posted on Jan 10, 2019 at 11:41:02am

Message modified by Ozymandias on Jan 10, 2019 at 12:29:44pm

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Ozymandias

Previous username: imanihonjin
Bio page: Ozymandias
Joined: Oct 9, 2006
Last login: Apr 18, 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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