Easy question, probably...
If a member of an LLC is also active in the business and being paid a regular salary as an employee, do Self Employment taxes apply only to the portion of income resulting from the member's share of the profits, or does it also apply to the member's salary as well? Thanks! Michael
>
>
>
>
>
>
>
>
>
Wishful thinking. ;-)
Is the LLC taxed as a proprietorship, partnership, C-corporation or S- corporation? Stu
Partnership- income passes through to multiple members, divided according to the operating agreement.
Unless the LLC has elected to be taxed as a corporation, and it doesn't sound like it has, a member CANNOT be an employee. So he/she cannot have any taxes taken from a salary (guaranteed payments, in partnership accounting), does not receive a W-2, and must pay his/her own taxes. This includes the self-employment tax on the salary/guaranteed payments and distributions of partnership items. The LLC does not pay the employer's half of social security taxes, so everything is subject to self-employment tax. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans
Have something to add? Share your thoughts — no account required.
Ask the community — no account required