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Single Member LLC

Tiger5
Level 4

How should a Single Member LLC pay themselves? They have ADP and he is currently getting a w-2 and a 401k. ADP saying that a lot of customer have it st up this way. he is wanting to pay himself and pay all the appropriate taxes like a w-2. How should he have ADP set him up?

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13 Comments 13
garman22
Level 13
Level 13

He cannot take a payroll on himself as a SMLLC unless his SMLLC has elected to be taxed as a S-Corp.

Tiger5
Level 4

and how do we know if he is selected to be taxed as an s-corp?

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garman22
Level 13
Level 13

Are you the preparer? Did you llc him?

Just-Lisa-Now-
Level 15
Level 15

An SMLLC is a disregarded entity for tax purposes, should be treated the same as any other sole proprietor, no payroll with W2.

Unless they elected to be taxed as a corporation.  Who helped them create the LLC?


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BobKamman
Level 15

You mean, of course, who helped HIM create the LLC, since there is no one else involved.

He done it all by hisself, after lurning about it at the seminar!

qbteachmt
Level 15

"How should he have ADP set him up?"

They don't. He doesn't need them, if he is the only person working for this business. He simply takes money whenever he wants to.

"ADP saying that a lot of customer have it st up this way."

They are wrong for the entity type of Sched C filing.

"he is wanting to pay himself"

As the owner of the Sched C business, all the money is his all the time and he takes a Draw (equity out) whenever he wants funds.

"and pay all the appropriate taxes like a w-2."

There is no W2 or 1099-M from his own business. He would need to estimate and pay Estimated taxes through the year, knowing how the business income contributes to his entire financial picture for 1040 purposes. Then, when you do the tax return, you also work up the Sched SE, which is the FICA taxes he is concerned about. That would compute how much he owed, along with the income tax liability, most of which should have already been paid as Estimates.

 

You posted this question in the Practice Advice section of the community forums. You also have a lot of topics along the same line, in Practice Advice. Practice Advice would be the forum section for you, running your own business, to be asking for guidance on business issues as you run your own business. For instance, are you taking tax preparation course meant for tax professionals? Continuing Education? Do you use the IRS publications and instructions for the answers you seek, before asking the peer users that volunteer here? This is not Tax preparation support. You seem to be leaning on other people that are as busy as you are, this time of year, for basic questions.

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beckynguyentx
Level 3

"How do we know he is S-corp"  

Simply just ask client if his LLC is S-corp. If client does not know, then tell him to call IRS business line to ask. 

Tiger5
Level 4

i did not LLC him. i am just doing his taxes and i am new at doing this and want to make sure i am doing this right. and advise him if he needs to change something in the way he is set up. i think who ever set him up did not do it right. 

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Tiger5
Level 4

i dont know who LLC'd him. thank you 

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Tiger5
Level 4

i appreciate your time and help and i apologize if i am in the incorrect forum and taking up time from you. i am new to these forums and didn't know what each meant. i am new and took over doing this business for taxes and bookkeeping. i have tried to use the IRS publications but it hard to get a specific answers. is there another forum that i should be in?

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qbteachmt
Level 15

"is there another forum that i should be in?"

You are posting on the internet, in a Community of peer users for Intuit's Professional Tax Preparation programs.

It helps to ask about how to use the software in the specific forum that is for the program you are using, not in this Industry Discussions section. That way, when you have a question about using the tax preparation program, you are asking the people that also use that same program.

If you need lots and lots of Tax Preparation help, this is not the place to learn how to prepare US income tax returns. You should already have done this through educational and professional development and ongoing continuing education programs, so that you are a Prepared professional for the tax year you are working on, for your customers.

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Tiger5
Level 4

thank you

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sjrcpa
Level 15

Get the LLC documents. Frequently the law firm's name is on them.


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