i'm lost...need advice

Discussion in 'Business Operations' started by Surferbum21, Jan 30, 2009.

  1. Surferbum21

    Surferbum21 LawnSite Senior Member
    from SW OKC
    Posts: 392

    So I got LLC'd a few years ago b/c I heard it was better than being a DBA in case anything happened someone couldn't come after my personal property but now I'm wondering if it even matters. My tax lady told me it would be a good idea to fill out a small corporation form2553 and claim myself as an employee of the company to reduce taxes I pay. I'm so confused and she's not very good at explaining things (i know...i'm gonna start cpa shopping). She wrote up a sheet that shows when payroll tax reports are due for each quarter for state and federal but didn't explain how to actually report these? Then she shows what my net check would be (according to what I would normally pay contract labor) at $1666.67 net check and shows what needs to be with held for FICA, federal, and state but again where do I withhold this to or whatever? I'm lost...

    BTW, I do pay taxes quarterly through the company
     
  2. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    the reason she wants you as an employee is simply because you have to be...

    now that's it's a LLC all the moneys ARE NOT YOURS, like with a DBA. you hear all the time on the news so in so is stealing from Co. X...

    this could be you. unless your paying your self as an employee then your stealing.
    you have turned the company into a 3rd person " so to speek"
    there is also a 600.00 ammount that your loosing because your NOT doing it this way.
    " um It may have went up to 900.00 this year " I'll have to recheck that.

    however, dont take my word or anyone elses here, GET YOUR SELF A EXPERT YOUR COMFORTABLE WITH.....

    I could just see someone being autited and saying well this guy on the internet said it was a tax decution......

    Best of luck
     
  3. Fvstringpicker

    Fvstringpicker LawnSite Fanatic
    Posts: 7,597

    A single member LLC is taxed like a sole proprietorship unless it elects to be taxed as a corporation. The LLC is a formed under state statue and has nothing to do, per se with federal tax. (i.e. you don't file as a LLC). The LLC does however do what its intended to do, protect your personal assets.
    What your preparer is talking about is using a corporation to avoid self employment tax by paying yourself a salary through the corporation and taking dividends (not subject to SE tax). It can be a tax trap however if you don't pay yourself a reasonable salary and try to take it all in dividends. Additionally, it only benefits you to the extent you of the dividends you can draw out in excess of your "reasonable" salary. For example, suppose your current business income is $60,000. You pay 15.3% Self employment tax on the entire $60,000. If you change to the corporate form and pay yourself a reasonable salary of $40,000 and dividends of $20,000, you, and your employer, the corporation, will pay 15.3.% only on the salary (40,000). the $20,000 dividends are exempt from SS/SE tax.
    File the payroll tax forms is a little confusing. You file by the last day of the of the month following the end of the calender quarter. The frequency of depositing the taxes in a bank (depository) depends of the amount of tax you're dealing with. Most small businesses make monthly deposits (by the 15th of the following month. You simply take a check and the deposit coupon form 8109 and hand it to the bank teller.
     

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