1099 v Payroll? Self Managing Properties

[Vishal P.]

I own various rental properties under a LLC partnership and I self manage those units, what is the best method of writing myself a check every month for property management? Do I issue a 1099 to myself or am I forced to do a payroll to myself since I'm one of the owners? The monthly property management should be considered an expense and not a distribution even though one of the owners is managing it.

[Linda Weygant]

An LLC does not pay its members via payroll or 1099.

An LLC member received profit distributions and maintains the rental profits as passive income. If you go down the road of guaranteed payments, that is self employment income, subject to Self Employment taxes. This may or may not be a good tax structure for you, but you need to get with a CPA or EA who knows and understands this stuff and get a good plan together for yourself.

It's pretty clear you don't have a good grasp of the tax implications or business structure issues of what's going on and you should make educating yourself on this with a good adviser your next priority so you don't make decision that have bad and long lasting implications.