Paying yourself if you are an LLC/Partnership--Please advise.

Discussion in 'Lawn Mowing' started by bilchak, Mar 5, 2001.

  1. bilchak

    bilchak LawnSite Member
    Posts: 89

    New LLC here in Ohio. Me and my partner are 50/50 and
    will be filing as a partnership with the feds and the state.

    What is the best way to pay ourselves weekly with regards
    to taxes?

    Do we really have to pay 28% fed. income tax, plus 15.3% self-employment tax? That does not seem right.

    Would really appreciate any info.

    My CPA is busy at the moment, and I'm trying to figure
    this out on my own.

    Thanks in advance,
    John

    P.S. I'm worried here!!!!
     
  2. joshua

    joshua LawnSite Bronze Member
    Posts: 1,226

    don't sweat it, talk to an accountent (spelling) mine has me paying i think $ 100 a month and then i pay whatever i owe at the end of the year, save every reciept you get and claim that as a loss, thats your besy bet, good luck.
     
  3. bilchak

    bilchak LawnSite Member
    Posts: 89

    How much are you paying yourself a week? Do you pay yourself year around?

    Thanks,
    John
     
  4. 1st impressions

    1st impressions LawnSite Member
    Posts: 58

    John

    You can not do anything with regards to the 15.3% social security tax. That has to be paid. I'm not real familiar with partnership law but when I was a sole prop. I could deduct a portion of the 15.3% as a business expense.
    Whether you need to pay the 28% income tax just depends
    on your income, If you are married, have children and other writeoffs. My accountant sent me a sheet that shows the amount needed to be withheld from each paycheck depending
    on the number of withholding allowances you claim.
    According to this form, someone drawing $500 a week would pay only $44 in taxes with 3 allowances. The greater the allowances, the less the tax consequence. Get hold of your accountant.
     
  5. bilchak

    bilchak LawnSite Member
    Posts: 89

    Thanks, I'm trying to get ahold of my acct. He is very busy right now (April 15th).

    Any more insight from the others? I know there a lots of LLC's on this list.

    John
     
  6. bilchak

    bilchak LawnSite Member
    Posts: 89

    Come on you LLC guys...........no info on paying yourself / partners and KEEPING TAXES AS LOW AS POSSIBLE.

    Would really appreciate the help.

    John
     
  7. Green Finger

    Green Finger LawnSite Senior Member
    Posts: 839

    We run our payroll through APS (automated payroll services company)

    We have a separate payroll bank account. Two days before payroll we deposit the money into the account. They cut the checks. They take care of filing payroll, Fica, Social security, and workmans comp. They mail out the W2s at the end of the year. They take care of everything.

    It only cost something like a 1.50 per employee per pay. They assume all the responsibility interms of filing with the feds. Every month they provide me and my accountant with reports and updates.

    You can check in the yellow pages under payroll services. Just call and inquire about their services.

    If you wanted to go that route. It works good for us. Less problems with irs and it keeps us clean.
     
  8. ChrisYanik

    ChrisYanik LawnSite Member
    from OHIO
    Posts: 50

    In a sole proprietorship or a partnership you should be able to withdrawl as much money as you and your partner have agreed upon. Since your the owner of the business is doesn't really make any sence for you to be making payroll deductions from your own pay. You and your partner should agree upon a weekly pay based on both of your personal needs as well as your business's needs and then withdrawl the money straight out of your business account. Just write a check to yourself and record the entry in your check registar as OWNER WITHDRAWL.

    Payroll deductions are only ment to withhold your employee's taxes from their paychecks. You should be filling estimated tax and then an annual return so payroll deductions do not apply to you.

    I'm not quite sure if that is the question your asking. Hope that this is helpful.

    Check with your accountant for a full proof answer.
     
  9. Mid Rivers

    Mid Rivers LawnSite Member
    Posts: 209

    I believe this to be true - if not do not hold me responsible. My wife will tell you that I am not the responsible type. :)


    I had a partnership a while back. What we did was basically payout what ever the job paid. We built decks part time. So when we got paid we would deposit that check and split it in half. Usually we would leave a little bit for running the business. Since we were only part time we didn't make much and our mileage and other exspenses were enough that we didn't owe much at the end of the year. So basically you can pay yourself however much you have in the account as long as your partner is paid the same amount assuming you have a 50/50 partnership.

    I would not do the partnership thing again! To me it is a good way to loose a friend. Just my $.02 worth. Good luck
     
  10. bilchak

    bilchak LawnSite Member
    Posts: 89

    Chris,

    Lets say we each draw 400 dollars a week. We pay
    ourselves 400 dollars total, then pay the taxes
    quarterly and, if there are more at the end of
    the year?

    Any idea what sort of taxes there would be on 1600 dollars
    withdrawn per month?

    Here's my thing with this LLC: The LLC is never taxed, all the taxes are passed onto the partners. So, what good
    will deductions such as fuel, supplies, depreciation, etc. do for the LLC? I wonder if we take all the write offs and apply them towards the partners? Say we spent 20,000 this year, 10,000 worth of write offs for each partner?

    I'm having second thoughts about this LLC.

    John
     

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