I will be the only one member in my LLC.
Means only owner and only employee.
I have one full time job as well. My LLC would be IT staffing and consulting company, so I don’t need any employee and even I don’t have to work daily.
I am in Texas and wanna form llc in texas profit will be 50k
Questions
1.Do i need to take salary every week ?
2.how about tax if i have to take salary and profit is 50k
3. How many different kind of taxes i have to pay, where and when ?
4. what if my LLC dont do any business in fiscal year
5.How hard to close LLC
Thanks
Answer
Here are your questions, answered in order:
1. As a single member LLC owner and sole employee, you do not need to take a salary every week. In fact, you don’t take a “salary” at all–you simply take profits from the LLC as you earn them. This means you could pay yourself every day, or only once per year.
2. If your LLC earns a $50,000 profit, then what will happen is this $50,000 profit is recorded on your personal federal income tax form 1040, on Schedule C (I’m assuming here that you have chosen to have your LLC taxed as a disregarded entity). In addition to federal income tax, you will also have to pay self-employment tax. You calculate self-employment tax using Form SE on your 1040. Self-employment tax is the self-employed business owner’s equivalent to an employee’s Social Security and Medicare withholding taxes. Instead of withholding each pay period, as the owner of a single member LLC, you pay your self-employment tax at the end of the year with your federal income taxes.
Because you live in Texas, I’m not going to discuss state income taxes, as Texas does not levy income taxes.
3. As I said above, a single member LLC’s owner will pay federal income taxes, as well as self-employment taxes. In addition, you will have to make quarterly estimated income tax payments.
Some people think that making quarterly estimated tax payments is something employees do not have to pay. That is incorrect. As an employee, your employer withholds federal and state (except for Texas, of course) income taxes from each of your paychecks and sends the money to the IRS each quarter. In other words, your employer is an unpaid tax collector for the IRS.
As the owner of a single member LLC, you don’t have an employer to withhold your income tax payments, so you have to do it yourself.
The form for calculating your quarterly estimated taxes is Form 1040-ES (for EStimated). If you make a mistake and underpay your estimated taxes, you will be liable for interest plus a penalty of 1% per month.
TO avoid penalties for underpaying quarterly taxes, you must pay the lesser of:
A. 100% of last year’s taxes (divided equally among the four quarters); or
B. 90% of what you end up owing at the close of the current tax year.
4. If your LLC doesn’t do any business during the year, then it will not have any income or expenses to report. You simply fill out your Schedule C with zeros. It will be a very easy form to complete!
5. Closing an LLC in Texas is not difficult. The formal name for closing an LLC is called “dissolution”. In Texas, you file a Form 605 Articles of Dissolution. The filing fee as of 2008 is $40.
Other states will have similar forms (though with different names, form numbers, and filing fees).
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