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Posted by Paul Thomas, CPA on December 7, 2006, 8:11 am
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> I have small business (LLC) of which I'm the only employee
> but I do occasionally have some 1099 contractors do work for
> me. I've paid myself a market-rate salary but I've ended up
> with over $70,000 cash in the bank and I'm not sure what to
> do with it.
>
> If I leave it in the business, I will have to pay corporate
> income taxes and then personal taxes later when I finally
> pay it to me. If I get it out now I will take a big tax hit
> it and will no longer qualify for contributions to my ROTH
> and Coverdell.
>
> I do not expect next year to be this good and would like to
> find some way to defer payment until next year, or the
> following year.
>
> I am in the process of getting an accountant and I have some
> question about that I'll ask in a separate post.
Single member LLC's are treated the same as a self-employed
person, unless you elected to be taxed as a corporation. As
a single member LLC, you shouldn't have paid any salary
(wages) to yourself. Instead, all the profits are taxed to
you, and within limits, subject to SE tax as well.
Find a local CPA or EA in your area how can, after assessing
the specific facts and circumstances, make suggestions that
will be of benefit to you.
--
Paul Thomas, CPA
paulthomascpapc@bellsouth.net
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