Deferred Salary Entry and Tax Impact

USA Discussion in 'Businesses / Corporations' started by DEMCPA, Jun 13, 2017.

  1. DEMCPA

    DEMCPA

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    Hello, this is my first post! Please bear with me.:):( I have a multi-member LLC that is taxes, as a Partnership. I know that my members can't get salaries right? As a partnership, they share in the earnings and losses ... SOOO, a Managing Member that spends 45+ hours a week on the LLC (vs members who are financing only) gets his reward from his majority ownership right? If I have someone working for the company without getting paid. Can I DR Salaries Expense and CR Deferred Salaries Payable Account? OR, can I setup a LOAN that is being made to the company since the company can't pay? Finally, can I write this off on the LLC tax return (taxed, as a Partnership) even if no actual salary was paid to the employee? Will I have have 'tax issues' here since there isn't a corresponding 941 or state employment report that was filed or taxes paid since the salary wasn't paid ... can I just not write this off then???? If not, how can I account for someone working for the company - - receives no equity and the company plans on paying cash at a later date? Is my journal entry of SALARIES EXP (dr) and LT LIAB - DEFERRED SALARIES (cr) correct?
     
    DEMCPA, Jun 13, 2017
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  2. DEMCPA

    Houston Tax Attorney

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    I will take a stab at this. You might look at guaranteed payments for the majority partner. With respect to the person who isn't getting paid, there isn't an accounting entry or deduction if they are not getting paid. You have to be careful with unpaid workers. They may be able to argue that they are actually partners....
     
    Houston Tax Attorney, Jun 30, 2017
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