LLC Paycheck?

[Possi]

Are owners of LLCs required to issue themselves a paycheck at any particular point in their business? I have a caterer who has lost money all these first 5 years, and this year looks like she might make a profit. Should I have her begin issuing herself paychecks ?

As a single owner LLC, I do her business on a Sch C. I remember years ago, an LLC owner had issued himself regular paychecks. The IRS made him stop doing that.

Now, there is a new law that says they can issue a paycheck, but I can't find whether or not they are REQUIRED to issue themselves a paycheck (like an S Corp with net profits...)

So, is she required to issue herself a paycheck?

thanks,
~possi, the summertime travelin' fool.......

[AJsTax]

No Paychecks allowed

As a single owner LLC, I do her business on a Sch C. I remember years ago, an LLC owner had issued himself regular paychecks. The IRS made him stop doing that.

Now, there is a new law that says they can issue a paycheck, but I can't find whether or not they are REQUIRED to issue themselves a paycheck (like an S Corp with net profits...)
..

A single member LLC filling as a sole proprietor on a Sch C (as you stated) can NOT issue themselves a paycheck. They can hire a family member to do some of the work and pay them or change status to a S-Corp if they want to issue a paycheck.

[Possi]

Thank You

I really thought the law changed this year or last year allowing a paycheck.

Thanks for clearing that up for me.

[Lion]

Profit

As a sole proprietor, her "paycheck" is her profit on Schedule C upon which she will pay both income tax and SE tax. If your client expects to be profitable this year, she should make ES payments ASAP.

[Possi]

thanks

Yes, I got it.

She will send in ES this year.

I have another LLC client who came to me from an accountant. She has gotten W2's for many years, as the accountant did the accounting, the payroll and the tax returns. I followed suit with the tax return. (I don't do her accounting or payroll, but I do file the W2's online for her, after the fact.)

Is she going to get in trouble?

I am looking for the place where I thought LLC was supposed to start issuing W2's (to owners) this year. I swear I didn't dream it.

I'll pick it up when I get back from vacation.

Virginia to Maine, I'm outta here....

~possi