I have a small business I opened around July and have net around $30,000. I am trying to get a financial advisor but everyone seems to be on thanksgiving break since last friday. As I understand it the IRS see’s Single member LLC’s as a disregarded entity and everything is taxed as personal income. So do you pay your personal income tax bracket rate, in addition to a small business tax rate?
I have a separate business bank account and have not taken any wages to date, however I am about to. My wife and I will fall in the 12% tax bracket as our joint income will be below $89,000 for the year. I am about to transfer $14k to my personal bank account as wages, but am trying to
I vaguely remember seeing that there is a small business tax of 18% on profits for sole member LLC’s. Does this mean I am taxed at 18%, and then an additional 12% on my wages that I transfer to my personal bank account?
The salary part will have payroll taxes taken out, in addition to income taxes.
The profit (whether you cash it out or leave it in the business) will flow over to you and you will pay Fed income tax on that just like it was regular income.
You’ll just get the benefit of not paying payroll taxes on the profit part.