Taxes as single-member LLC
by Bryan, Window Shopper
- Created: May 22, 2011, 6:47 am
- Updated: January 2, 2013, 12:07 pm
I'm glad to have found this forum. I have asked so many CPAs and tax folk the following questions, and have gotten so many different replies, my head hurts.
I am looking at starting a single-member LLC, and am very confused on the taxes. The bulk of my confusion is on whether I will have to file taxes if I am not making a profit.
1) If I do not make a profit in the LLC, must I file taxes? Many CPAs I have spoken with have thrown around the $400 figure. I was told that if I make less than $400 in profit, I do not even have to file. Is this correct? In fact, that's what the majority say.
2) When I start making profit, there is some confusion on quarterly tax estimates. The LLC is not my only job. It is strictly a side job. I have another job, in which income taxes are withheld. Many CPAs said that my withholding from that job should cover necessarily and I would not have to make quarterly payments. Others disagree and say that I would need to make quarterly payments. Again, it's about 50-50.
For what it's worth, here are the exact figures from my 2010 W2:
Federal income tax withheld: $20,810.58
Social security tax withheld: $6,621.60
Medicare tax withheld: $1,573.75
I know I have to pay self employment taxes, etc. on the profits I make on the business, but do I need the quarterly estimates?As a follow-up question...with low to no estimated profits for at least a year, would it make more sense to be taxed as a corporation, and simply leave any money in the corporation, or does being taxed as a sole proprietorship, and taking the money out make more sense? I'm assuming the filings to be taxed as a corporation would be absurd?
Thanks a bunch in advance! Hopefully I can get these answered definitively once and for all.
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