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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14463
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I just got a new client. Her business is reported on Schedule

Resolved Question:

I just got a new client. Her business is reported on Schedule C since inception in 2009. The business is an LLC, held by a single member (in a community property state where she files as MFJ). Her old CPA set her up on actual payroll and it appears the wages are also being deducted on the Schedule C.

I've never seen this. My understanding is that as the single member of the LLC, she does not have payroll, but receives income as would any other "sole propritorship" and would take draws throughout the year.

Please advise.
Submitted: 10 months ago.
Category: Tax
Expert:  Megan C replied 10 months ago.

Megan C :

Thank you for your question, my name is XXXXX XXXXX I will be happy to assist today

Megan C :

You are correct - with a single member LLC the owner should not show up on payroll

Megan C :

In the end though she pays the same tax, because she pays her FICA taxes through her payroll and then the profits of the business are subject to self employment taxes....so in the end, the tax should be the same but it's incorrect to have her on payroll.

Megan C :

You would just take owner draws.

Customer:

OK, that's what I thought. Thanks for getting back to me.

Megan C :

You're welcome

Customer:

I know, it's really a "no never mind" but I prefer to do things correctly. Could be that way is the only way she'd pay her taxes timely.

Megan C :

Once you are satisfied with your answer, please rate me positively so that I may receive credit for assisting you today

Customer:

Have a good one!

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 14463
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 3 other Tax Specialists are ready to help you

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