Need consultation on how to setup payroll for an new LLC. Any pointers?

[krisprem]

Hi, I am setting up a new LLC in Florida. Question is

1. Should I setup the employee as W2 or 1099? (This is a single employee LLC)

2. What type of Federal Filing Form to be considered? 

[Anonymous_ · Accepted solution]

Do you have an employee or are you referring to yourself as the "employee"?

A single-member LLC is disregarded for federal income tax purposes and, in effect, is treated the same as a sole proprietorship. As such, you would not issue yourself a tax reporting statement, such as a 1099 or W-2; you are not an employee of your single-member LLC.

Consequently, you would file a Schedule C for your single-member LLC and pay self-employment tax on any net profit of $400 or more.

[Critter-3]

If you actually have someone working for you (not yourself)  then how you pay them depends on how you treat them ...  are they an employee or sub contractor ?   See what the IRS says on this subject ... once you have figured that out post back for specific instructions.    https://www.irs.gov/newsroom/irs-reminds-business-owners-to-correctly-identify-workers-as-employees-...

[krisprem]

Yes, considering myself as an employee.

[DoninGA]

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@krisprem wrote:

Yes, considering myself as an employee.

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Is this a single member LLC that has not been incorporated as a S Corp?  If so, then you are filing the return as a disregarded entity using a Schedule C.  You are not an employee, you are the sole proprietor and do not receive a W-2 or a Form 1099-NEC.  You report your Net profit on loss on the Schedule C with the result reported on your federal tax return, Form 1040 Schedule 1 Line 3 which flows to the Form 1040 Line 8

[Anonymous_]

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@krisprem wrote:

Yes, considering myself as an employee.

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As noted in my previous post (above), the sole member of a single-member LLC is essentially a sole proprietor and sole proprietors are not considered to be employees of their sole proprietorship.

In short, unless you made an election for your single-member LLC to be treated as a corporation for federal tax purposes (which does not appear to be the case here), then you are not an employee of your LLC.

[Carl]

1. Should I setup the employee as W2 or 1099? (This is a single employee LLC)

There is no such thing as a "single employee LLC".  The owner of an LLC can not be an employee of that LLC. Under no circumstances will the owner of a single member LLC ever issue themselves a W-2, 1099, or any other type of tax reporting document. There are not exception *FOR* *A* *SINGLE* *MEMBER* *LLC*. I stress this, because an LLC can make an election to be treated like an S-Corp or C-Corp *FOR* *TAX* *PURPOSES* *ONLY*.

A single member LLC is considered a disregarded entity for tax purposes. Income earned by the business is no different than income earned by you personally.

2. What type of Federal Filing Form to be considered?

It all gets reported on SCH C as a part of your personal 1040 tax return.

Now, if you do "in fact" have other employees, how you treat them for tax purposes depends on how you treat them in your business. Are they contractors? Or are they actual employees?