From: Tarpon Springs, Florida

Dear TaxMama,

Do member(s) of an LLC electing to be taxed as a Corporation (in Brooklyn, NY) pay themselves a salary or do they just draw money?

Minu

 

 

 

Hi Minu

If you're choosing to behave as a corporation, you must be consistent - all the way.

Yes, you're right. You need to establish payrolls for the working members.

The payroll amount doesn't need to be the same for all the members. Establish payrolls that relate to work or business contribution of each member - not their investment ratio. You'll get some ideas from this response on Google Answers:

You'll also get some solid information on how to handle this and other issues that will be coming up for your business in my new book, Small Business Taxes Made Easy.

Pay particular attention to the first chapter, the Start-Up Checklist - even if your business is already established. You're going to get information that will push your business to a higher level of success.

You'll also get some excellent guidance from Jan Zobel's updated book Minding Her Own Business: The Self-Employed Woman’s Essential Guide to Taxes and Financial Records

I hope this helps.

Best Wishes,
Eva Rosenberg, MBA, EA