Paying yourself as an employee

(Missouri)

All though you are the sole member of an LLC, could you still possibly pay yourself as an employee? For instance, when you get Quickbooks, sign up for the payroll service and then have taxes taken out of your pay each time and just pay yourself as you would your employees?

Answer

You don't want to run it that way--it's more complicated, costs more, and is not legally required.

In fact, unless you have elected to have your SMLCC (single member LLC) taxed as a corporation, I don't even think it's legal to W-2 yourself (e.g. put yourself on payroll).

Instead, as a single member, simply write yourself a check for the amount of the LLC's profit each month, quarter, year--however you want to arrange it.

Use Form 1040-ES and 1040-SE to, respectively, calculate your quarterly estimated taxes and estimated self-employment tax. Put that money aside so you can make your quarterly payments.

If you have a high-paying day job (making $100,000+), then you might only be liable for the Medicare portion of self-employment tax--about 2.7% as of 2008.

TurboTax Home and Business Online will help you calculate estimated taxes for your LLC. Be sure to choose "Home and Business", and not Deluxe or Premier, as "Home and Business" is designed for single-member LLCs.