LLC and Payroll Questions

[Vlad Kuzin]

There are hundreds of topics on this forum regarding tax strategy for LLC. When I talked to my CPA, they explained if I will classify my company with IRS as S Corp, then I will be avoiding paying self-employment tax, but I also will need to put myself on the payroll. If I will keep my LLC (two members) as partnership for tax purposes then I will be paying slightly more taxes but do not have to deal with payroll. Currently under this LLC, I will be doing about five rehabs a year and some wholesaling. Which is low number of deals. In this case what do you guys suggest? classify my LLC as S-Corp and deal with payroll hassle or keep it as partnership?

[Mary B.]

If you are flipping as a rehabber you will pay more taxes regardless if your company is structured as an LLC S-Corp, C-Corp etc or Ptrshp because you are flipping and considered a speculator not an investor per government policy. If you want to get the best tax benefits you will buy and hold for residual income.

Payroll tax delinquency is very likely the number one reason many business owners are in the hot seat with the IRS. The trust fund tax laws can eat you alive. Mind you I am no accountant nor attorney but let's just say I have some government insight.

However if you are the employee / member / corporate officer (with no other employees in the company outside of the member(s) corp. ofcr(s)) you may not have to file quarterly tax returns and just claim that income when you file your personal / business returns by 4/15. Visit the IRS website www.irs.gov.

Yet if you decide to hire regular employees omg immediately find an enrolled agent to assist you.

Kudos,

Mary