Taxpayer filed for LLC 4 years ago with the state. He has a Federal ID #. Did nothing with it. Now as of 10/1 will be changing from an employee to SE Mfg Rep for several companiew. He wants to use the LLC now. Does he actually take a payroll check or is it a draw like Sch C individual? Also, can he give his wife a payroll check with taxes withheld? Can he set up a retirement plan? Would that be a 401K, SEP or Keogh?
-
-
First I would check with the state to make sure that he did not close the LLC down either by not paying the annual fee or filing the tax return. In washington state if you do not pay the annual fee then they will effectively close the llc or corp.
No payroll for a Sch c or SMLLC, owner / member, if taxed as a sole p or partnership.
His wife if working for the business and is not a partner or member she may draw a paycheck.
Yes he can setup a retirement plan is all qualifications are met, one big one is he usually needs to have a profit.
As to which one it really depends on the business , how many employees , how much profit and so on. he could setup a 401k, solo 401k , safeharbor 401k, SEP IRA, Simple IRA, Traditonal IRA or Roth IRA, or defined benefit plan. I am sure I probably missed one or two others as well. -
Single Member LLC
Yes the owner can be on a payroll, but only if the LLC elects to be taxed as a C Corp or S Corp. The election is made by simply filing the initial return. Very few people do this, most Single Members LLC's just file as proprietorship Sch C's (Simplicity is a virtue).Comment
-
You file the 2553 to elect to be an S corp. You file the 8832 to elect to be a C corp. You don't need to do both, but you have to file one. You can't simply start filing the 1120 or 1120S and assume that makes the election.Comment
-
Ty
Thank you BN for that clarification.Comment
Comment