more-arw search

Q&A Forum

As the sole owner of an LLC (taxed as an S-Corp), what are all of the different taxes I must pay?

As the sole owner of an LLC (taxed as an S-Corp):

1) What are all of the different taxes I must pay?

2) When exactly are these taxes due?

3) How does the concept of 'retained earnings' apply to LLC S-Corps?

4) How often am I supposed to pay myself dividends?

Answers

Topic Expert
Regis Quirin
Title: Director of Finance
Company: Gibney Anthony & Flaherty LLP
LinkedIn Profile
(Director of Finance, Gibney Anthony & Flaherty LLP) |

Not a simple answer.

1 and 2 - Primarily you are looking at -
-Federal - The entity must file an 1120S information return, without a tax implication to the entity. The tax liability flows directly through to the sole-owner's taxes.
-State - Your state may have an annual report fee/franchise tax; as well as require you to pay a Sales & Use tax.
You also may be liable for quarterly payments of estimated taxes in April, June, September, and January. If you actively work in the business, you may need to pay self-employment tax on your distributive share.

3 - Retained Earnings - a Financial Reporting concept. A LLC will show Retained Earnings on their balance sheet. The important question I believe you are asking, "Can I shelter income in the organization from taxes?" The answer is no. LLC's pay taxes on income regardless if it is distributed or not.

4 - Dividend Payments - I recommend you pay yourself dividends quarterly, and remove excess cash from the company on a set schedule.

A LLC is state organized, which means the laws are non-standard across the nation. For example, some states do not require you to pay a franchise fee. I highly recommend you seek the guidance from a tax adviser in your state.

Joshua Lowry
Title: Controller
Company: Real Estate One
(Controller, Real Estate One) |

Before paying dividend, be sure you've reviewed the reasonable salary requirements. If the IRS determines you've paid dividends in lieu of salary, you could have issues.

http://www.journalofaccountancy.com/Issues/2012/May/20125234.htm

Topic Expert
Wayne Spivak
Title: President & CFO
Company: SBAConsulting.com
LinkedIn Profile
(President & CFO, SBAConsulting.com) |

And to add to Regis, depending on your locality, local taxes. For example, in New York City, LLC's pay a special tax. In New York State they pay yearly filing fees... Everyone has their hand in your pocket...

1488 views
Topics

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.