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Paying yourself and Payroll

sgl41377

LawnSite Member
Location
Canton, GA
I am a new LLC. I work by with one new employee. Currently I pay myself a check at the end of each month . I have paid my helper a total of $600 in cash so far this year. I am lost as to what to do. He will be making about $800-$1600 per month during the season. What is the best way for me to pay him and me. Any ideas?
 

rodfather

LawnSite Fanatic
Location
Clinton, NJ
First thing ya did wrong was paying him cash...that is illegal since taxes were not taken out for him and you did not contribute any employer taxes as well. I suggest you talk to your accountant as to how the 2 of you are to be paid whether it is weekly, bi-weekly, or monthly.
 
OP
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sgl41377

LawnSite Member
Location
Canton, GA
I usually pay a Part-time cash up to $600. Then I write checks. I plan on calling my CPA on Monday.
 
OP
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sgl41377

LawnSite Member
Location
Canton, GA
Please correct me.....Is the only way to pay an employee correctly according the the IRS is to give him or her a paycheck with Federal, State, Medicare, and Social Security taken out. What is the cheapest way to do this?
 

buchwald

LawnSite Member
Location
INLAND EMPIRE
Your accountant or bookkeeper can probably make out checks and do all the correct deductions for a fee of course. Find out if they will also put the taxes into a seperate account, so that they can be paid quarterly or at the end of the year. In a seperate account you won't be as tempted to take from it.
 

theturfboss

LawnSite Member
Location
Indiana
As an LLC, if you are the owner you are a "member", you can not pay yourself as an employee. We used to be an LLC. I dont know the exact rules (In Indiana), but you are paid in draws and guaranteed payments, owing your taxes either monthly, quarterly, or annually. Your employee(s) must be treated as such. When you pay them, you must pay your state and local taxes, federal taxes, and unemployment taxes as well as FICA. You also by lawn have to carry workers compensation insurance on employees, and its a good idea for yourself if you get hurt. We use ADP payroll service (I think they are national). For $50 per payroll, they do all this for us and we usually have about 10 guys on payroll during the peak season. You cant call your employee a subcontracor and send him a 1099 if you set his hours and let him use your equipment.
 

buchwald

LawnSite Member
Location
INLAND EMPIRE
I don't know how an LLC works, my other company is a "S" corporation.
As a "S" corp. everyone is an employee so there are no self employment taxes. Everyone has taxes taken out like a regular employee. Becoming a
"S" corporation is a little more expensive than a LLC, but there are alot of benefits, like depreciation, equipment rental income, car allowances. Talk to you accountant about it. I know in california, anyone that holds at least 2% share of the company is exempt from workers comp.

Also, an accountant or bookkeeper will probably charge less than ADP, Paychex or any large payroll service. My accountant said he would do a couple of checks a pay period for free, but that's when I pay a monthly fee for his service.
 
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