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LLC and personal income

T

TeaDance

Active Expediter
LLC and personal income
We've become an LLC now instead of a sole prop but the tax guy we've used the last few years is still wanting to treat me as an individual, lumping all the income together for tax purposes. What I'm curious about is, since our customers pay the LLC and not me, and since our drivers are paid by the LLC, should I be able to get paid by the LLC and file an individual return on an amount that I receive as a salary from the LLC, or do I have to lump all the money together? I'd like to keep company profits separate, apart from what I get paid as a salary from the company. Am I going to have to form a different type of corporation in order to do that?
 
mzraik

mzraik

Active Expediter
I'm not 100 percent positive,
Ask your tax man if you need to file your taxes as an s corp.

You still keep your limited liability corporation status but file as an s corp and then pay yourself as an employee (w2).

Talk to your cpa to see what he says about that approach.



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paullud

paullud

Veteran Expediter
It seems like you would want to keep them separate to maintain the corporate veil since you have other drivers.

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xiggi

xiggi

Veteran Expediter
Owner/Operator
Don't quote me in this but as a single person llc you are able to do a pass through meaning you can treat taxes as your tax man is. Maybe that is why he is doing so. I think you have the option to do that or not, I also think if more than one person is listed on the llc a pass through might not be possible.
 
paullud

paullud

Veteran Expediter
zorry said:
Curious to know how much of a corp viel really excists .
Click to expand...

I guess it would depend on how bank accounts are handled but I wouldn't want to make it easier for someone to go after my personal assets.

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F

Fkatz

Veteran Expediter
Charter Member
HI ALL,

sORRY FOR THE LONG DELAY GETTING BACK TO ALL OF YOU, BUT HERE IS A PROBLEM WITH BEING A LLC.

A LLC is a Limited Liability Corporation, which is exactly as it is stated. Here is the Major Problem

1. An LLC is limited only to the state borders that you live in.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
you have to check which other states and see what states honor the LLC from your. If they do not
you must form a LLC is each state that you go into to make sure your covered.

2. If you used your Home, and purchase your truck under the LLC that is your Monetary
limitation, no others, which means that if you are sued, your personal assets are also gone.

3. A Individual who is a single Member LLC Must File on a Schedule C- Profit & Loss from Business
or Profession and any profit is totally taxable.and subject to Social Security Taxes and
Federal taxes ( Minumin Federal is 15%, Social Security Self Employment Tax is 15.3%)

4. A LLC weather it has Members ( Husband and wife, partner or others besides himself is a
PARTNERSHIP LLC AND A PARTNERSHIP MUST BE FORMED IN THE STATE AND FEDERAL FORM
1065 IS USED.

5. AN LLC, can and make the election to file as an "S" Corp, but must either make out 1099's or
be a saleried Employee of the Corp, BUT, the election must be made in the First year the LLC
is formed, but you will have to set up a payroll for each employee including yourself.
plus you will have to pay Workmens Compensation insurance due to being a Corporation.

6. If you file as an "S" Corp, it is only a tax filing desicion, it does not cover you at all, you still
are considered a LLC according to Law, and are responsible to any suit that you incur.

7. If you want, you can convert your LLC to a Corp and taking the "S" Election, within 90 days
If you get sued by any one they have to sue the Corporation, and you are not responsible,
The Corporation is.

9. Remember if you decide to convert to a Corporation, there are fees involved, but you would
have total protection no matter what state you would be in if you have an accident

10. Remember you still have to have a Separate Checking Account in the Corporate Name,along
with any assets that you incur.

If you have any questions please do not hesitate to ask
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online
Franklin Katz, ATP, PA, PB,

Providing Professional Accounting, Bookkeeping, Payroll and Income Tax Preparation Services

Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding related
penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax
related matters addressed herein.
 
hossman2011

hossman2011

Veteran Expediter
Owner/Operator
7. If you want, you can convert your LLC to a Corp and taking the "S" Election, within 90 days If you get sued by any one they have to sue the Corporation, and you are not responsible, The Corporation is.
Click to expand...
But then you'd pay Corp tax rates, yes? Is it better for a husband/wife o/o team to remain a sole prop and carry a large umbrella policy? We're getting ready to buy our first truck. We're researching the best way to protect our assets and save as much as we can on taxes.

By the way, Frank, thanks for all of the helpful advice you offer here.
 
Lawrence

Lawrence

Founder
Staff member
Frank,

There are many issues here with an LLC for an Owner Operator or Fleet Owner - what do you recommend for person in this industry and the best way to mitigate liability?
 
F

Fkatz

Veteran Expediter
Charter Member
Teal Dance,

Your Accountant is correct.
If you are a Single Member LLC the Entity is considered a Non-passive business Entity. and is used as if you are Self-employed. The LLC is exactly what it states, it is limited to the amount of monies, or assets that you put into the business. and if you have problems you definitely can be sued both business and personal.
You are only covered up to the limit of the investments.

You can have the choice to File your LLC as a "S" Corp, but you have to Apply to the state for a Corp instead of a LLC, and you must make the election to be an "S" Corp.

I have a thread here that dates back to either last year 2010, or 2009 that gives you the Pro's & Con's of an LLC.

With a LLC, If you have an Accident anywhere, You are not covered except within the State you reside in, plus you still can be sued and they can go after all of your assets including you home.


if You are a Full Corporation or "S" Corporation you are covered no matter what state your are in and if an accident occurs they can only sue the Corporation, due to you are an employee or owner of the corporation. they can take what ever the Corporation owns including your home if ysou use it for colllatera, they cannot go after you personally.

So if you want to be an LLC it is consided Personal Income and is tax a such with Social security and Medicare taxs to be paid. Unless you do not make a profit.

My suggestion if you want to be completely covered Convert your LLC to a Corporation and make the Election to be an "S" with the Formation of the entity
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online
Franklin Katz, ATP, PA, PB,

Providing Professional Accounting, Bookkeeping,
Payroll and Income Tax Preparation Services

Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding related penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax related matters addressed herein.
 
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