Several issues..
If your small business is an LLC or partnership - you should receive schedule K-1 that reports your pro-rata share of income. That income is treated the same way as your self-employment income - net business income is generally subject of both - income tax and self-employment taxes. Self-employment taxes are generally 15,3%. Your income tax depends on your total income, filing status, deductions and credits. If you need an estimate we need to know all these information.
If you are in 25% tax bracket - your tax liability would be 15,3% self-employment tax, 25% income tax, 4.35% Michigan state income tax - total 44.65% from your $30,000
If your small business is C-corporation - and you are an employee of the C-corporation - you should receive wages the same way as you are working on your main job. In additional - you might receive dividends from C-corporation - that are taxable as dividends.
If your small business is S-corporation - then you are considered an employee of the S-corporation - you should receive wages - similar as above - the IRS required that shareholders who work for S-corporation to be paid a reasonable wages. All other taxable income - should be passed through as dividends regardless if the money were actually distributed or not.
Let me know if you need any help.
So, if I pay myself $30,000 from the LLC Partnership, that I am a partner in, I (personally) will get hit with the 15.3% self-employment tax, 25% (or 28%) income tax and the 4.35% Michigan state income tax, or would I only be getting hit with the self-employment tax?
You will be liable for
-- 15.3% self-employment tax on net business income - or $30,000*15.3%=$4590
Your taxable income will be adjusted by additional $30,000. But it will also be reduced by half of self-employment tax - of $2295 - so your total adjusted gross income will be increased by $30,000-$2295=$27705.
If you pay Michigan state income tax in 2009 and if you itemize - you will be able to deduct state income tax on the schedule A - so your taxable income for income tax purposes will be less be $27705*4.35% = $1205
So your estimated ADDITIONAL taxable income will be $27705 - $1205 = $26500
And your estimated additional income tax liability will be $26500 * 25%= $6625
Partnership is not taxable entity - all taxable income and tax liabilities - are passed through to members - and calculated on their individual tax returns.
Self-employment tax is IN ADDITIONAL to income tax - not instead.
Tax Preparer
Taxes, Immigration, Labor Relations