Payroll question I did not see a category for Partnership, this would not be an LLC.
I have had conflicting answers regarding this question so I hope someone can set me straight.
My cpa told me that I can put myself and my partner on payroll and only pay taxes like normal withholding rather than paying taxes on the business profit.
Normally to my knowledge, it goes like this example:
Company makes 100,000 after expenses, form 1065 is filed and then a K1 Schedule is filed for each partner. Since it is 50/50 split then each partners profit is 50,000 each and taxes are paid on those amounts regardless of whether they have that in the bank. Correct?
My CPA is telling me that I can put myself and my partner on payroll like if I was employed by my own company and only deal with taxes on that.
As an example:
100,000 made by company, each partner on payroll would make 12,500 year end and would have been paying taxes on that only which obviously is 25,000 combined leaving 75,000 that would not be taxed?
Is this right?
Reason for this is that I dont need all the extra money from the business, i can survive perfectly fine with a certain wage at this point in my life. I rather the bank keep growing until I retire or expand.
But, everything else I read tells me I CANNOT pay myself as an owner like a w-2 type of employee.
I have other questions. |