I did not mean payroll in a formal sense. I meant payroll as a way to designate your earnings to avoid misunderstandings with your partner. You do not have to create another account if you do not want to.
For example, if we have $10K in our account to pay ourselves, can we just simply cut a $5K check for each of us, then we pay our taxes on our own? (I pay my taxes, and my partner pays hers)?
Response 1: Yes.
I'm wondering if we do this, how do we note that on the company taxes? Do we just say the business made $10K but paid it all out so then the business shows no profit and therefore, the company doesn't pay any taxes, but then my partner and I will each have paid our own taxes on the $5K each.
Response 2: This will be noted in the proper Tax Schedules for reporting income, profits and losses. You need to consult with your tax accountant for the proper forms.
I know that there is a particular way this is done w/ LLCs (different than corps) but I am just trying to get clear what that is. I do know that with a corp it is better to do payroll taxes, but I thought that wasn't the case with a LLC.
Response 3: The difference between the tax treatment for LLC and Corporation is that with an LLC you will either choose to be taxed on corporate level or individual level whereas the corporation does not have that. With corporation there is the dreaded double taxation: taxation at corporate level and then at individual level.