Llc and partnership

Collapse
X
 
  • Time
  • Show
Clear All
new posts
  • JenMO
    Senior Member
    • Apr 2007
    • 974

    #1

    Llc and partnership

    Llc was formed with one member 90%, but contributing all money, and one member 10%. 10% member was named managing member. If llc elects to be taxed as partnership (corp of s corp not desired) can the 10% member draw a w-2 salary from the partnership he is a 10% member of? Or does he take a guaranteed payment instead and pay all of his se taxes himself.
    If 10% is just named managing member, must they elect to be taxed as a partnership?
  • ATSMAN
    Senior Member
    • Jul 2013
    • 2415

    #2
    A 10% LLC member can't get a W2 wage from the business. They can take a draw and pay SE on it.

    If they want W2 wages, go sub S.
    Taxes after all are the dues that we pay for the privileges of membership in an organized society. - FDR

    Comment

    • jsamans
      Member
      • Jan 2014
      • 98

      #3
      Originally posted by JenMO
      Llc was formed with one member 90%, but contributing all money, and one member 10%. 10% member was named managing member. If llc elects to be taxed as partnership (corp of s corp not desired) can the 10% member draw a w-2 salary from the partnership he is a 10% member of? Or does he take a guaranteed payment instead and pay all of his se taxes himself.
      If 10% is just named managing member, must they elect to be taxed as a partnership?
      Who is the managing member, or even whether there is a managing member, isn't material. A multi-member LLC is taxed as a partnership unless it elects to be taxed as a corporation. If it so elects, it can then elect S-corp taxation.

      Under no circumstances can an LLC member who is taxed as a partnership receive W2 income, because a partner is not an employee; standard compensation comes in the form of a guaranteed payment. As ATSMAN said, if the members want to be employees, the LLC will need to make the elections for corporate and S-corp taxation.
      --
      James C. Samans ("Jamie")

      Comment

      Working...