Can I hire employees as a Single-Member Limited Liability Company (LLC)?

[celestial21]

I just started an LLC and I am in the process of obtaining an EIN, it asked me about how many member(s) are in the LLC. I just want to make sure I am submitting everything right! Also, I am open to any tips!! I just got my LLC certificate last week! 

[pk]

@celestial21 , single member LLC   does not require a separate return --- for tax purposes ( ONLY) it is a disregarded entity .  So you report  your business activities on Schedule-C  as part of your own tax return.  It is treated like  self-employment i.e.  you pay full FICA on net income-- Social Security + Medicare -- total of 15.3%   ( it is called SECA ).

EIN ( and a separate State  tax ID in some states ) provides you the facilities to employ others, withhold  federal/State/FICA taxes and transmit these amounts the respective taxing authorities.  You also may have to pay FUTA and/or state  unemployment amounts.  You have to issue W-2s for employees and 1099-NEC for contract/non-employees by the due date -- generally by 31st of Jan.  Please review IRS Pub-15 and its follow-ons -- they cover a lot of material including tax tables for withholding. There are similar booklets issued by the states .

Please to note -- and I have seen this problem often  when I was a tax professional ---- keep your bank accounts separate -- do not mix personal account with business account.  Never. never use personal account. credit card etc. for business and vice-versa.  It will make life a lot easier especially tax time  and/or any audit. 

I have known quite a few small businesses , do all their  accounting  etc. by themselves. It is doable especially with all the software now available.  If you have been doing your won taxes, then there is no real reason why you  cannot  continue to do so even  for the  single member LLC. 

Other than that , you should be well on your way.  Good Luck on your new endeavor.

Is there more I can do for you ?

pk

[celestial21]

Thank you so much! 

Also I appreciate the tip, I am currently planning on opening a separate business account specifically for my LLC, I don't want to mix my personal with my business! 

Yes! is there a good software you would recommend? 

Thank you so much again! I really appreciate it! 

[tagteam]

There are a plethora of programs for your purposes.

If you are planning to use TurboTax in the future, then you might want to consider Quicken or QuickBooks, both of which support TurboTax data importing.

Note that there is a learning curve for each (which is steeper with respect to QuickBooks).

[Mike9241]

with employees comes the following: an EIN, filing quarterly federal 941s and making timely payroll tax deposits.  at year-end forms w-2 for each employee and form w-3.   they go to the Social Security Administration also federal 940.  for the 940 tax deposits may be required. federal payroll tax deposits require registering for EFTPS https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system  if your state has an income tax state 941's or the equivalent may be required. frequency of filing may depend on the amount of taxes withheld.  then there will also be state w-2 and w-3  at year-end - filed with the state.  it is likely your state requires employers to file quarterly Unemployment Compensation returns and pay the UC tax. another item is that your state may require the business to carry workmen's compensation (WC) for its employees.

failure to carry WC  if required and late payment of payroll taxes can result in substantial penalties.  what about sales taxes? I strongly suggest a consultation with a tax pro.   

Quicken and TurboTax don't handle payroll taxes.  depending on your abilities as assessed by the pro, he can recommend how to proceed.  contacting an insurance agent to get WC coverage would be required.  As a pro, I found that many taxpayers could properly handle the payroll taxes through the app they were using. others required a complete hands-on approach.  

[celestial21]

Thank you so much for all this information! 

I just booked a meeting with a professional, just to be on the safe side. 

Once again thank you! 

[pk]

@celestial21 as a retired professional ( and as I pride myself being quite analytical ) I am embarrassed.  Not a single of my colleges , nor I bothered to ask the type of business endeavor you are embarking  on nor the level of ex[experience  you have in operating a business.  That should have been our first question. While most of the general advice spouted herein ( @Mike9241 , @tagteam  are generally correct  , the nuances  that are  specific to the actual business has been ignored by all ( including myself ). Therefore my apology.

What type of business are  you starting  -- consulting.   re-selling products,  sale of value added products, rental business, realestate  business, farming, equipment rental etc. etc.  -- these  businesses have specific characteristics  that require focused answers.

 As to employing a professional --   depending on your particular  type of business, I would suggest perhaps  an accountant / CPA is your best choice  for setting up the accounts  ( categories  for book keeping ) -- many tax professionals  ( including myself  are not well versed in accounting conventions  -- accounting is  very much based on conventions, sometime not quite logical  but is indeed uniform the world over ).

Again I apologize  and rest my case .

Good luck

pk

[tagteam]

No offense, but I am not going to apologize for merely suggesting that @celestial21 investigate accounting software that interfaces (in terms of importing) with TurboTax and I do not believe that such software is industry-specific.

[celestial21]

Hey, y'all it's quite alright! 

I appreciate for taking the time to help me understand all this tax stuff! But no worries I am planning on opening a small coffee shop stand at my local farmer's market and then slowly start growing from there! If y'all got any tips I'm open to anything. 

Once again thank y'all so much! 

[tagteam]

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@celestial21 wrote:

If y'all got any tips I'm open to anything. 

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You mentioned that you are meeting with a professional and that is a great start. Best of luck!