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Excess Business cash at year end

I have small business (LLC) of which I'm the only employee but I do occasionally have some 1099 contractors do work for me. I've paid myself a market-rate salary but I've ended up with over $70,000 cash in the bank and I'm not sure what to do with it. If I leave it in the business, I will have to pay corporate income taxes and then personal taxes later when I finally pay it to me. If I get it out now I will take a big tax hit it and will no longer qualify for contributions to my ROTH and Coverdell. I do not expect next year to be this good and would like to find some way to defer payment until next year, or the following year. I am in the process of getting an accountant and I have some question about that I'll ask in a separate post.

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Reply to
chambersdon
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You obviously do not know what you are doing. A single member LLC is a disregarded entity for tax purposes, unless you elected to be taxed as a corporation. If you made that election without consulting a qualified tax professional, you made a major mistake.

Even if you do the bookkeeping yourself, you need an accountant to explain the rules and to help you comply. If you are the only employee, you don't have a payroll!

You should listen to your friends about a good accountant. The main things should be that he/she is qualified (a CPA or EA) and you feel comfortable communicating with the person. If you are not sure, make appointments to meet with several -- there should be no charge for an initial consultation -- then pick the one that you feel most at ease with.

Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Reply to
L K Williams

wrote

Single member LLC's are treated the same as a self-employed person, unless you elected to be taxed as a corporation. As a single member LLC, you shouldn't have paid any salary (wages) to yourself. Instead, all the profits are taxed to you, and within limits, subject to SE tax as well. Find a local CPA or EA in your area how can, after assessing the specific facts and circumstances, make suggestions that will be of benefit to you.

-- Paul Thomas, CPA snipped-for-privacy@bellsouth.net

Reply to
Paul Thomas, CPA

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