BTW, a great site, easy to navigate and great Q & A's! Bravo!!

I know for an S Corporation there is a reasonable salary issue, but what about an LLC?

Is there any advise that you may provide on this subject?

Thanks in advance.

The good news is that for an owner of the LLC there are no limitations or requirements for having a salary!

In fact, the IRS does not allow a salary for the partner/ owner since all the profits in the LLC are distributable to all the partners, (for active partners these profits are subject to Self-employment taxes). So, to the IRS it really makes no difference whether the taxpayer has a salary or not.

Owners of LLC's generally do not take a salary, however, for employees of course you would have payroll.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

Dear TaxGuru,

Thanks for your reply. I really appreciate it!

But, if I dont take a salary, how do I pay my taxes, do I pay at the end of the year, if so I would have to pay a heck of lot of taxes due to my profits being over $50,000.

Also, I would have to pay penalties right, and interest for late payment. But, isn't there a way to avoid all that?

I would like your valuable input again, thanks again!

Wayne,

That is the reason why CPA's are in business!! LOL!!!

The CPA's are there to project your income for the year, and throughout the year whilst they are preparing your books or financial statements, they can strategise to:

1. minimize your tax liability

2. alert you of your potential tax liability

3. help prepare the 1040 estimated tax coupons where you would be making quarterly tax payments.

4. Usually, the CPA will advise you of planning for your tax liability.

5. Usually, the first year of filing, the penalties and interest may not be of material concern.

6. But in the subsequent years this would be of a major concern as profits increase in your LLC.

7. You are right, in that you would not be happy to have to be told in April 17th, 2007 that you owe $10,000+in taxes!!!

Making timely estimated quarterly tax payments to both the IRS and the State would save you substantial underpayment penalties and possible interest.

In short, please consult a nearest CPA as soon as possible, they would be most helpful in the planning phase of your taxes.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.