LLC

[Denne]

I have an LLC client and all of the members are on the payroll, just like the other employees. They want that because then they are paying their income taxes along the way. I don't see that it makes any difference as far as what they will pay in income taxes. They are paying some additional Unemployment taxes this way, but they said they don't care. Is there a problem with them being on the payroll?

Thanks.......

[Booger]

I think this question comes up EVERY YEAR. No, there is no problem with it, if that's what

the client wants to do.

Booger

[michaelmars]

Booger is 99% correct. there is an issue it the entity is a real estate entity. real estate profits are not subject to fica but taking them out as payroll is subject to fica. a 15.3% increase in taxes.

[Denne]

Thanks for confirming what I thought! Working alone is good at times, but lonely at others.....like when I have a little doubt or a question. Thank you for confirming ;~)

[SunTaxMan]

You are not alone. We are all here. And it is wonderful to have this "counsel of peers" - most of whom are smarter than I am.

It is also good to have this "counsel of peers" who have the ability, and the where-with-all, to give me a good swift kick in the butt, when I demonstrate I need it!

[joelgilb]

You are not alone. We are all here. And it is wonderful to have this "counsel of peers" - most of whom are smarter than I am.

It is also good to have this "counsel of peers" who have the ability, and the where-with-all, to give me a good swift kick in the butt, when I demonstrate I need it!

Judge Roy Bean (aka Joel), Bringing my Foot Back.... And Getting ready to administer some western justice

Says. Judge Roy Bean, You ask and you shall receive

Unless of course you have money for whiskey

[jainen]

>>They are paying some additional Unemployment taxes this way, but they said they don't care<<

I'm always uncomfortable about this kind of client. Why DON'T they care about running their business in the right way? They appear to be building UIB and SSA eligibility that they may not be entitled to under the law. Even worse, they aren't maintaining the correct form of separation between themselves as partnership owners and the LLC as a liability shield.

Sure, it usually works out. But when it gets messed up it can REALLY get messed up. So the way to ask the question is not what business risks there are, but what business advantages. What makes it worth even low risks? To me it just sounds stupid.