View Full Version : Another Darn LLC Question

02-13-2006, 12:44 AM
Hi I am a single person LLC.

My accountant tells me there are different ways for me as the only employee to pay myself does anyone have any input on this ?

02-22-2006, 04:29 AM
Since you are a single member LLC, I assume that you are filing a schedule C as a sole proprietor, which is what most single member LLCs do, rather than electing to be treated as a corporation. Being treated as a sole proprietor, you cannot pay yourself a salary in the normal sense of paying any employee where taxes are withheld and the payroll is deducted by the business. The only way you can pay yourself is by taking draws from the business, which are a non-deductible expense of the business. If you elected to be treated as a corporation you can pay yourself a salary and take distributions, but the distributions are normally treated as taxable dividends to you if they come from earnings and profits. But most single members LLCs do not elect to be treated as Corporations because of the double taxation factor. I am not sure what other ways of paying yourself your accountant may be thinking of, but this is generally how it works, depending on whether or not you are treated as a sole proprietor or corporation.

02-25-2006, 09:02 PM
Convert the LLC to a corporation. Then file to change the C corp to an S corp. The sub S corporation can pay the owner with draws or with an actual salary or a combination of both. If you are a Sub-S, you avoid the double taxation, since this is a flow through entity. We use a registered agent to file the conversion from an LLC to a corporation. The one we like is Harvard Business Services on the east coast, Delaware. They have filed almost a dozen for us in the past two years and we've never had a problem. They over night the paperwork, scan the papers, whatever you want. Some services can even be done on their website at delawareinc