This week\u2019s question comes from Nikki, an LLC member. I am a member in an LLC. My neighbor is a member and receives a paycheck, but I\u2019ve been told that I can\u2019t receive a paycheck. Can an LLC member receive a paycheck from the LLC? Answer: For federal tax purposes, an LLC can make an election to be taxed in one of the following three ways:<\/p>\n
This election is generally made when the entity is formed and must be done by the time the entity files its first income tax return.<\/p>\n
If your LLC has elected to be taxed as a sole proprietorship<\/a>, the LLC cannot pay wages to the member and the member cannot have income tax, social security tax, or Medicare tax withheld, and cannot receive a Form W-2<\/a> from the LLC.<\/p>\n If your LLC has elected to be taxed as a partnership<\/a>, the LLC cannot pay wages to the members and the members cannot have income tax, social security tax, or Medicare tax withheld, and cannot receive a Form W-2<\/a> from the LLC.<\/p>\n If your LLC has elected to be taxed as a corporation, the LLC can pay wages to the members and the members can have income tax, social security tax, and Medicare tax withheld, and can receive a Form W-2<\/a> from the LLC. This is true even if there is only a single member in the LLC.<\/p>\n As for LLCs that have elected to be taxed as a sole proprietorship or a partnership, members may receive a draw from the LLC and must pay quarterly federal estimated tax payments to cover the amount of federal income tax and self-employment tax liability they will have, unless covered by withholding on other income. Vision Payroll<\/a> can work with you and your CPA to determine an appropriate draw and estimated tax payment schedule. You can then receive the draw as a check or direct deposit with each payroll and schedule appropriate deductions such as retirement plan contributions. Contact Vision Payroll<\/a> today to get started.<\/p>\n","protected":false},"excerpt":{"rendered":" This week\u2019s question comes from Nikki, an LLC member. I am a member in an LLC. My neighbor is a member and receives a paycheck, but I\u2019ve been told that I can\u2019t receive a paycheck. Can an LLC member receive a paycheck from the LLC? Answer: For federal tax purposes, an LLC can make an […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[610,224,96,44,12,225,226,237],"_links":{"self":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/3360"}],"collection":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/comments?post=3360"}],"version-history":[{"count":4,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/3360\/revisions"}],"predecessor-version":[{"id":3375,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/posts\/3360\/revisions\/3375"}],"wp:attachment":[{"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/media?parent=3360"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/categories?post=3360"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/old.visionpayroll.com\/kb\/wp-json\/wp\/v2\/tags?post=3360"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}