Quote: (09-02-2011 04:15 PM)oldnemesis Wrote:
As I said above, this is only relevant to C corp. Maybe S-corp too, but I never heard it. LLC and partnerships are tax pass-through entities, and I never heard of IRS requiring the LLC or partnership/sole proprietor to pay salary to yourself. The link you provided clearly states about corporation, and very few small businesses form C corp as it is too expensive to maintain and only makes sense when you have significant income which you'd like to keep in the company.
I guess firstly, what is significant income? C Corps are not too expensive to maintain. Maybe you are talking about California fees which isn't the same as the rest of the US.
I don't know where you got that. You have more stuff to comply with an you should be doing similar stuff with your llc to make it look legit.
Second, distributions from a SCorp or LLC are not taxed the same as income. Social Security and Medicare are only paid on SALARIES. Thus, you are not paying those if you don't take a salary.
That is why the IRS wants you to take a salary that is common within your industry.
http://www.ehow.com/how_7225324_disbursements-llc.html
I never said anything about partnerships or sole proprietorship. I would imagine they are all salary and thus all taxes are taken out.
I am always willing to learn something new if you want to start posting your own links.