 |
Single Owner LLC Question About Paying Out Myself Using Quickbooks?
Single Owner LLC Question About Paying Out Myself Using Quickbooks?
I have a Single Owner LLC with a few independent contractors. I plan on filing my taxes as a sole proprietor and I have been keeping track of my income and expenses with Quickbooks.
During 2007, I occasionally wrote checks to myself for work I did with the business. Can I count myself as an independent contractor and associate those checks with the PAYMENT TO CONTRACTOR account like I did with my independent contractors?
Is it OK to count myself as an independent contractor of the business?
Answers:
botygy: As a single member LLC, you are right. You will report your business activity on Schedule C just like a proprietor. I would not consider yourself an independent contractor, rather the money you are taking throughout the year are simply distributions of profit, even though you may have tied it to specific jobs. In quickbooks, you should have an account called "Member's equity" or something similar. This is where you would have recorded your initial investment in the venture. Set up a new account called "Member withdrawals" and post the payments to yourself there. Remember, this is not an expense account. Quickbooks will ask you for an account type and you should select an "equity" or "capital" type.
2008-01-29 06:49:34
2008-01-29 06:49:34
Chosen Answer
bostonianinmo: You are not an IC of the business. The money you take out of the business goes into the Owner's Draw account. That is a "contra equity" account and any draws reduce your equity in the business.
The entire net profit of the business will show on Schedule C and is subject to tax whether you draw the funds from the business or not. You'll pay income and self-employment taxes on the net profit from the business venture.
Even though you didn't ask, I would recommend that you be able to prove that your ICs are truly ICs and not employees. If one of them files a Form SS-8 with the IRS and the IRS rules that they're employees this could get VERY expensive for you.
2008-01-29 08:17:04
bostonianinmo: You are not an IC of the business. The money you take out of the business goes into the Owner's Draw account. That is a "contra equity" account and any draws reduce your equity in the business.
The entire net profit of the business will show on Schedule C and is subject to tax whether you draw the funds from the business or not. You'll pay income and self-employment taxes on the net profit from the business venture.
Even though you didn't ask, I would recommend that you be able to prove that your ICs are truly ICs and not employees. If one of them files a Form SS-8 with the IRS and the IRS rules that they're employees this could get VERY expensive for you.
2008-01-29 08:17:04
Chilla: Because you are a sole proprietor you will take it out as an owner draw
2008-01-29 12:32:56
2008-01-29 12:32:56