D
dickens
Hello,
Myself and two other business partners have formed an LLC. All three
of us will be managing members splitting all profits and losses
equally. We have no employees. I've researched a ton on the net and
haven't been able to come up with concrete answers for these
questions:
1.) Do LLC members have to draw a regular salary throughout the year
(not talking about guaranteed payments or lease/ loan payments to
members from the LLC), just a simple salary like you get from your 9-5
job? If so, I hear the term "reasonable salary" - please define.
2.) If #1 is yes you do have to draw a salary, is this regular salary
taxed the same as "Pass Through" Profits/Losses distributed at the
end of the fiscal year, meaning that both regular salary and
distributions are taxed only by self employment taxes? If #2 is yes
they are taxed the same why would you have to take a salary if the tax
end results in paying the same amount of taxes.
3.) If LLC's don't have to pay a regular salary to it's members
and if all three members of the LLC perform duties which could qualify
for guaranteed payments, do we absolutely have pay distributed payments
or can we elect not to receive distributed payments and elect to take
profits/losses solely during year end distribution of profits/losses.
(Please keep in mind this question is under the scope of federal taxes,
I know states have their own little caveat's here. I am going to
also consult a tax consultant on this issue as well; I am just trying
to get as much info as possible before inevitably hiring a CPA. FYI I
also am aware that salaries go in to operating expenses and therefore
lower net income so I see the advantages of actually paying a salary, I
just want to know what is mandatory.).
Thanks,
Joe
Myself and two other business partners have formed an LLC. All three
of us will be managing members splitting all profits and losses
equally. We have no employees. I've researched a ton on the net and
haven't been able to come up with concrete answers for these
questions:
1.) Do LLC members have to draw a regular salary throughout the year
(not talking about guaranteed payments or lease/ loan payments to
members from the LLC), just a simple salary like you get from your 9-5
job? If so, I hear the term "reasonable salary" - please define.
2.) If #1 is yes you do have to draw a salary, is this regular salary
taxed the same as "Pass Through" Profits/Losses distributed at the
end of the fiscal year, meaning that both regular salary and
distributions are taxed only by self employment taxes? If #2 is yes
they are taxed the same why would you have to take a salary if the tax
end results in paying the same amount of taxes.
3.) If LLC's don't have to pay a regular salary to it's members
and if all three members of the LLC perform duties which could qualify
for guaranteed payments, do we absolutely have pay distributed payments
or can we elect not to receive distributed payments and elect to take
profits/losses solely during year end distribution of profits/losses.
(Please keep in mind this question is under the scope of federal taxes,
I know states have their own little caveat's here. I am going to
also consult a tax consultant on this issue as well; I am just trying
to get as much info as possible before inevitably hiring a CPA. FYI I
also am aware that salaries go in to operating expenses and therefore
lower net income so I see the advantages of actually paying a salary, I
just want to know what is mandatory.).
Thanks,
Joe