

Ask HN: How do I get paid as an LLC? - LLCthrowaway

Hi HN,<p>I&#x27;m an independent contractor looking to set up an LLC for liability reasons. I have a few questions:<p>1. If I operate under the LLC&#x27;s name, do I ask clients to send payment to me (under my name) or the LLC? If they make payment for invoices to the LLC, how do I cash them? Do I need a business bank account or can I cash them myself with proof of ownership?<p>2. The LLC will only have one member, myself. Can I elect to pay myself a yearly salary from its earnings and do taxes yearly instead of paying taxes quarterly? Or do I need multiple employees for this?<p>Thanks, I&#x27;m looking to do this in the near future so any help would be great.
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apsc
You have some options, and of course you should consult an accountant. Here
are some thoughts a. If you have contracts in place where they pay you with a
check that says "John Doe" (your name) then you may want to set up the company
either with the name like "John Doe Associates" or have a "business alias"
(called "doing business as") John Doe--again, you have to do this with your
registration/state/tax folks etc. b. You do have to tell customers the tax id
of your LLC. Thus, the check may say John Doe, but the 1099 at the end of the
year should not be issued to your SSN, it should be to the LLC's tax number.
c. YOu do need a business tax account d. You can elect to pay yourself yearly,
and take most of the distribution as dividends rather than income---check with
your accountant. In some states, they will insist you provide employment
details every quarter anyway. This is a headache and you may want to use a
payroll company or outsource this--that costs a few bucks. e. I am not an
accountant, and not a legal expert. Just a guy who has had to deal with
business issues. So please check everything with experts. f. In my opinion,
liability prevention and tax advantages can accrue through this course of
action, so you are on the right track. You may also want to check if you need
an LLC or S corp and why... Cheers

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brudgers
Talk to an accountant and an attorney because LLC rules vary from state to
state and the correct form of revenue distribution will vary depending on the
actual cash flow model of the business. Finally, LLC's do not always provide a
corporate shield for their owners [though usually they do].

My advice is to give yourself maximum flexibility in distributing revenue to
yourself because the big challenge of consulting is cash flow and you don't
want to have to pay yourself when the company account is empty or be
prohibited from making up for a missed check when the business is flush.

Good luck.

