Single-member llc

[tsherna79]

I started my single-member LLC a few months ago. I've paid myself 1 time so far and est tax is coming due 9/15/22.

1. When I file my taxes, would I be doing 2 different returns or would it be done on the same return?

2. Am I supposed to be withholding taxes as an employee or creating a 1099 for myself at the end of the year?

Thank you in advance for your help

[Laurie_EA]

HI, if your single member LLc you can be classified as a disregarded entity and chose to pay yourself as either a salaried employee and file a w-2 . That will  be considered an operating expense for your LLC and reduce your company's profits or you chose to pay yourself as an independent contractor an issue yourself a 1099-MISC , you will be responsible for paying self employment taxes on the amount you earn.

   Also this can all be filed on a 1040 with self -employment schedule C . 

[EricE_CPA · Accepted solution]

As single-member LLC you have your options:

1- Treat your LLC as a pass-through entity, where you don't pay yourself salary.  Instead, you take an owner's withdrawal from the profits earned by the company.  Example, write yourself a check from the business bank account and deposit into your personal account OR transfer funds from your business account to your personal account

(prepare ONE tax return for both your personal income & your LLC)

OR

2- Pay yourself as a W2-employee or 1099-contractor which will require you to file TWO separate returns.  One for the LLC and one for your personal return

My recommendation is to go with Option #1