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Should I pay estimated taxes for my single member LLC and myself?


@raidrmom61 wrote:

When paying your quartarly estimated taxes are you required by the IRS to send in the exact same amount every quarter?

Or can you just calculate what you make each quarter and send in 20% of that?


You can pay estimated taxes in any amount at any time for the tax year.

Carl
Level 15

Should I pay estimated taxes for my single member LLC and myself?

When paying your quartarly estimated taxes are you required by the IRS to send in the exact same amount every quarter?

No. You can send in $2000 for one quarter, and $1 the next quarter. THen if you have a quarter with absolutely no provide, you don't have to send in anything.

Generally after your first year of self-employment you'll have a fairly good idea of what you're going to make the next year. So for example, if in the first year:

 - YOu make $1000 the first quarter and send the IRS $200.

 - You make $5000 the second quarter and send the IRS $1000

 - You make $10,000 the third quarter and send the IRS $2,000

 - You make $3000 the third quarter and send the IRS $600

So overall you made $19,000 the entire year. It's a good bet that you're going to do a bit better your second year, and with the above numbers it looks like the 4th quarter is the "slow season" for the business.  So based on that, my guess is that I"m going to make at least $22,000 my second year. That would be an "average" of $5,500 each quarter. Twenty percent of $5,500 is $1,100. So regardless of what I make each quarter I'm sending the IRS $1,100 each quarter.

Now lets suppose I do the same for the first two quarters as I did my prior year in business. But for the third quarter I make a whopping $20,000 profit in just that quarter alone. That means I'll be making $10,000 more for the current tax year, than I did the previous tax year.

So I'll just add another $20 to my planned $1,100 third quarter payment, and send the IRS $2,200 for that quarter. I could also split that 20% between my last two quarterly payments if I wanted to also, if I again expected my fourth quarter to still be my "slow season" like it was the previous year.

 

 

Anonymous
Not applicable

Should I pay estimated taxes for my single member LLC and myself?

my answer would be that a single member LLC  with no employees, you are not an employee, does not pay unemployment compensation taxes.       such taxes are based on wages so with no wages no UC taxes.   That is for sure for Federal purposes.   what state do you live in?  we may able to check for sure but I'm virtually certain that the same rules would apply.

 

however, many states impose an annual franchise or similar tax on  an LLC.   

 

in addition if your state taxes income, the LLC income will be included in your personal income tax return. 

 

should have added a caveat because many threads omit significant information.  so the answers based on what's given are generally correct. but once the OP starts adding details, the previous answers are totally wrong.

 

if you are an LLC that has elected to be taxed as an S-Corp then:

1) you are an employee

2) the IRS and tax laws require you to take a reasonable salary for services performed

3) not only would you have to pay state and federal and state UC taxes on the salary, but fica and medicare taxes would also have to be paid at the corporate level 

4) the activities would not be reported on schedule C.  an S-Corp return would have to be filed and then the net income flows to schedule E.   any profits after the salary are not subject to payroll taxes.

Carl
Level 15

Should I pay estimated taxes for my single member LLC and myself?

my answer would be that a single member LLC with no employees, you are not an employee, does not pay unemployment compensation taxes.

That is correct. UC taxes are paid to the state, not the IRS or other federal agency.  I had to pay UC taxes my first year, but only for the 3-4 weeks I actually had an employee. Back then, the U.C. tax was paid only on the first $7K or so of employee earnings. Don't know what it is now though, as I've not had employees for 18 of the 19 years I've been in business.

 

Anonymous
Not applicable

Should I pay estimated taxes for my single member LLC and myself?

for companies with employees, besides possible state UC taxes there are federal UC taxes form 940

Carl
Level 15

Should I pay estimated taxes for my single member LLC and myself?

@Anonymous I don't recall fed UC taxes. But then it was 14-15 years ago for me and maybe I just forgot. Unless FED UC taxes "kicked in" sometime after 2005 maybe?

 

c_wal30
New Member

Should I pay estimated taxes for my single member LLC and myself?

I'm running into this same issue. Any advice?

DianeW777
Employee Tax Expert

Should I pay estimated taxes for my single member LLC and myself?

Yes. If you have a single member limited liability company (SMLLC) then no estimated taxes would be paid on behalf of the LLC. The IRS considers this a disregarded entity and all income and expense is reported on your individual tax return.  Pay all and any estimated taxes under your social security number (SSN).

 

@c_wal30 

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