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I started a single person LLC in May of this year. I have…

HI...I started a single...

HI...I started a single person LLC in May of this year. I have not taken a salary as I am rolling all of the profits back into the company inorder to insure that I have enough in my business account to be able to prepay vendors. I have paid all of the sales tax due to date. How should I do my taxes this year for the business? For out regular income taxes we are on a payment plan bc we owed a large sum from a couple of years ago...ideally I would like to keep this separate so that IF i get a refund I can roll it back into the business...

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Not that I can think of

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3/13/2018
TaxRobin
TaxRobin, Senior Advisor
Category: Finance
Satisfied Customers: 18,181
Experience: 15 years of experience in financial advising with emphasis on tax issues.
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A single member LLC files a Schedule C and attaches that to their 1040 form.

Depending on elections made by the LLC and the number of members, the IRS will treat an LLC as either a corporation, partnership, or as part of the LLC’s owner’s tax return (a “disregarded entity”).

Specifically, a domestic LLC with at least two members is classified as a partnership for federal income tax purposes unless it files Form 8832 and affirmatively elects to be treated as a corporation.

And an LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes), unless it filed Form 8832 and affirmatively elected to be treated as a corporation

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Customer reply replied 4 months ago
I am not sure i fully understand...I fill out the schedule C on my normal tax return correct? What if I am slated for a refund? Since I am on a payment plan for my personal taxes would any refund I get on my business go towards that? Again I have taken NO salary and have incurred a ton of start up costs and business related expenses...
Customer reply replied 4 months ago
can you pls clarify?

Yes, the IRS will generally offset your refunds when you have a debt and are on a payment plan. BUT you cannot file any other way. The LLC is a disregarded. That means it is not a corporation for US tax purposes.

TaxRobin
TaxRobin, Senior Advisor
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Customer reply replied 4 months ago
ok thx

You do not take a salary form the LLC. All the money is yours and you do not pay yourself like an employee. Any money you take from the LLC is not deducted

You are most welcome.

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Customer reply replied 4 months ago
what do you mean not deducted?

I mean that if you take out $500 to use for personal that is not deducted on the Schedule C. It is your money already so you do not deduct that as wages like you would if you paid an employee.

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Customer reply replied 4 months ago
understood...so since I have never done this before...what do I pay the taxes on...the total profit minus deductible expenses?

Yes, your net (Gross less expenses) is carried to your 1040 form. You will also pay Self Employment tax on the profit.

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Customer reply replied 4 months ago
how much is self employment tax...is it a percentage?

The self-employment tax structure for 2017 is:

  • 15.3% on the first $127,200 in net self-employment income. (Social Security portion)
  • 2.9% on any net self-employment income above $127,200. (Medicare portion)
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Customer reply replied 4 months ago
lol...MAYBE I made 35K...so that is in the area of 5200...right?

Around that yes.

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Customer reply replied 4 months ago
thx!

You are most welcome.

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