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Payroll and social security tax

Florida |

I'm confused. I'm have a professional LLC which I started 2 years ago and am confused on the payroll taxes (ie. form 941). I haven't made any money but just have been breaking even in my business so I haven't drawn any salary other than reimbursing myself of expenses of the business. Since I dont' pay myself a salary, am I required to withhold social security and payroll tax? If so, what do I base it on, $0?

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Attorney answers 3


The income of an LLC is subject to payroll taxes, unless the income is passive or the LLC is is taxed as an S-corporation. It does not matter if you have not taken money from the business; the real issue is one of taxable income.

You should consult a qualified accountant to discuss the reporting requirements for your LLC, especially if the LLC is taxed as an S-corporation.


If you have worried about this for more than 5 minutes, go blame that guy in the mirror. You may not have any liability but you sound like you haven't filed yet. Go talk with an accountant now, tax season is over, get it done. When you do draw a salary/draw see if a payroll service is reasonable. They file the tax docs, you file personal docs. This saves you those monthly IRS letters, the chest pains and worry.
Remember- Al Capone never went to jail for murder or mayhem, but tax evasion. Have someone professional look at what you've got, and let them do the worrying.


An automated payroll deduction system through Quickbooks or Bank of America (and I'm sure a few other banks) could have solved your headache.