Best Ways to Get Paid With a Single Member LLC

Описание: In this video, we outline the basics of owner compensation when using a single-member LLC. Here are some of the main points.

Disregarded LLC/Sole Proprietorships
The sole member is not an employee of the LLC. They are self-employed
Net profits of the LLC are generally subject to self-employment taxes
No requirement to setup payroll filing Form 941, 940, and W-2 for the sole member

S Corporations
A shareholder-employee who actively participates in the business is an employee
Should be setup on the company payroll requiring filing payroll returns, withholding federal income taxes, and payroll taxes
Shareholder employees should set compensation at "reasonable" levels. Not too high or too low. Setting compensation too low is a potential red flag
Shareholder can also receive a distribution which is generally not taxable, but is a reduction to the shareholders' basis in the stock.

C Corporations
A shareholder-employee who actively participates in the business is an employee
Should be setup on the company payroll requiring filing payroll returns, withholding federal income taxes, and payroll taxes
Shareholder employees should set compensation at "reasonable" levels. Not too high or too low. Setting compensation too HIGH is a potential red flag to try and reduce corporate income taxes and potential dividend taxes
Shareholders can also receive a dividend distribution from corporate earnings and profits (E&P). Dividends are taxable and reported on Form 1099-DIV.

Sample Form 941 for S Corp:    • How to Fill Out IRS Form 941 - Simple Exam...  
Form 7203 for S Corp Basis:    • How to Complete IRS Form 7203 - S Corporat...  
Capital Gain on Excess Distribution:    • IRS Form 7203 - Capital Gain on Distributi...  

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DISCLAIMER: The information provided in this video may contain information about tax, financial, and legal topics. Such materials are for informational purposes only and may not reflect the most current developments. These informational materials are not intended and should not be taken as tax, financial, or legal advice. You should contact an advisor to discuss your specific facts and circumstances. Self-help services may not be permitted in all states or jurisdictions. The use of these materials does not create an attorney-client or confidential relationship. This video does not cover every topic or issue related to these informational materials.

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