Travis Raml, CPA - Blog

A common request from some LLC owner(s) is to pay themselves a salary. Though it is possible it is unlikely this appropriate especially if the owner filed his or her own LLC filings. Single member LLC’s by default are treated as Sole-Proprietor (an ignored entity and with business income reported on schedule C of his or her personal tax return). Likewise multi-member LLC’s are by default treated as Partnerships (with business income reported on tax form 1065 with income and losses passed through to the partners).

In either case a salary is not permitted by the LLC owner(s). Instead the owner or partners can take distributions which can or can not have a bearing on their taxes. Regardless traditional paychecks and remittance of taxes through the organization is not appropriate.

So what can be done? In this case the LLC owner(s) have a couple options.

1) Continue to take distributions in liu of salary.
2) File form 8832 with the IRS to elect corporate tax status of the LLC with the IRS.

Under option (2) once the IRS has accepted the 8832 the LLC will be recognized as a corporation for tax purposes, and the owner(s) can generally begin to tax a salary.

However, special care should be taken before such decisions are made since election of corporate tax status can not generally be changed for 60 months after the effective date of the filing.

If this or other tax questions are concerning you please feel free to contact me (free of charge) and I will advise you of your available options. I can reached at (443) 927-9161 (MD), (703) 637-9881 (DC & VA), or by email at travis@ramlcpa.com.

Thanks,
Travis Raml, CPA
http://ramlcpa.com/

If you’re a small business owner you’ve probably seen those QuickBooks commercials showing the pleased business owners effortlessly entering transactions into QuickBooks and with a few simple clicks everything is complete………..if only if it were that simple.

If you’re a small business owner that has gone done this route there is a good chance that you’ve found yourself saying what did I get myself into. Whether it’s excess transactions, to many bank accounts, unreadable financial statements, or any host of additional problems you’ve quickly discovered that it’s not just a simple click.

First thing I tell clients who find themselves in this situation is don’t feel bad. It really is NOT your fault. The advertisements make it sound simple, and you’re concerned with saving a buck these days………but the fact is maintaining your own books can quickly become an unmanageable task, especially if you’re running most of the day to day operation of your business.

So what can you do? If you are committed to doing the books yourself, than I would suggest that we setup the QuickBooks for you and help train you to be successful. Most of this can be accomplished in just a few hours. If you have a limited volume of transactions and feel you have the time to handle it, this is a great option. We can even do quarterly reviews for you just to make sure your not veering off course during the year. If you have a relatively high volume of transactions or you simply don’t have the time to handle it, then we can do it for you. We’ve designed our services with affordability in mind and can meet virtually any budget.

If you’re ready to end the nightmares then feel free to contact me (free of charge) and we can discuss your situation in more detail. I can reached at (443) 927-9161 (MD), (703) 637-9881 (DC & VA), or by email at travis@ramlcpa.com.

Thanks,
Travis Raml, CPA