Hi, I have read oodles of information on the Internet and every post I have found here regarding forming an LLC. These answered the majority of my questions, but a couple still remain and I was wondering if someone could help me out:


1) According to http://www.activefilings.com/states/kansas.htm, in Kansas (the state where I live), there is a 4% income tax rate.
a. Is this the only tax I have to pay when I give myself a ‘paycheck’, or is this in addition to my personal income tax?
b. If personal income tax is additional, if I file in Delaware for example, does that mean I can skip the 4% (I release there is a foreign llc filing fee).

2) What exactly are annual statements? :look:
a. Are they just balance sheets or a listing of profit and losses?
b. It goes on to talk about shareholder equity tax. Same on the official form for annual statements for Kansas (http://www.kssos.org/forms/lc.pdf). They both agree that it is $1 per $1000 shareholder equity. I don’t fully understand this. Does this mean total net worth (ie profits) of the business, or how much I have invested?

3) I don’t see anything about state quarterly taxes, are these required? Are federal quarterly taxes required?

4) I don’t see an LLC type in QuickBooks; do you guys use any special tax software that helps out in calculating taxes?

5) What exactly is an EIN? Is it required only if I have employees or is it used for taxes?


Thanks in advance for any advice or leads in the right direction!

hmm good question

As to the quarterly tax payments, I live in Wisconsin and have an LLC. I called my state revenue dept., and was told that if I do not provide tangible products, I do not need to charge or pay tax on my webhosting or design. IF, however, I provide them with a hardcopy of their site on cd, that qualifies as tangible property and I must pay taxes. Again, this is just Wisconsin, not sure about Kansas.
As to the EIN, it doesn't cost anything, you download form SS4 I think, fill it out, call the feds and give them the info over the phone, which is what I did. They issued the number immediately and said I would receive the paperwork in 4 - 6 weeks, and I did. It is good to have just because you no longer have to use your SSN to identify your company. Spreading your SSN around isn't the best thing to do anyway.....

Originally posted by jarrod
5) What exactly is an EIN? Is it required only if I have employees or is it used for taxes?
Re: EIN, it is similar to a socail security number but for the business. When you register an LLC, you are creating an entity and you'll need it for tax and payroll (eventually).

An EIN is an Employer Identification Number and like Chicken said its like a SS # for your biz.

I would suggest getting a payroll service. the $25 or so a check they will charge you might be worth it since they do all the taxes, unemployment (really just another tax), and most will file the quarterly reports for you (which if you don't the fines are bad from what I hear).

It wasn't till I started a business that I realized why most people in business have an accountant and a lawyer. Luckily, I am related to one of each.

As far as taxes... they are always required. :)

Originally posted by jarrod
Hi, I have read oodles of information on the Internet and every post I have found here regarding forming an LLC. These answered the majority of my questions, but a couple still remain and I was wondering if someone could help me out:
First, I don't think anyone can accurately answer those questions without more information. You should absolutely talk to an accountant; you're asking questions that are open to different interpretations based on how you choose to set up your company, how you are paying yourself, etc. And you're asking them of people who aren't really experts in those matters.

But anyway...
a. Is this the only tax I have to pay when I give
myself a ‘paycheck’, or is this in addition to my personal income tax?Are you giving yourself a "paycheck?" That is, are you an employee? If so your company has to withhold taxes from your paycheck and pay them to the feds. And you have to pay taxes on the checks, like you would on any income. But there are other ways to transfer money from the company to yourself; so does your use of quotes around the word mean you don't really mean a paycheck? Then, is it an expense reimbursement? Consulting fee? Transfer of owner's equity? And of course if you're set up as a sole proprietor all of the income taxes are paid on your personal return anyway.
3) I don’t see anything about state quarterly taxes, are these required? Are federal quarterly taxes required?
Federal quarterly taxes are required if your LLC is being treated as a separate tax entity. They may be required for you personally, depending on whether and how you are paying yourself from the LLC's profits. Whether they are required at the state level varies by state.
4) I don’t see an LLC type in QuickBooks; do you guys use any special tax software that helps out in calculating taxes?As far as the IRS is concerned, there is no "LLC type." If more than one person forms an LLC, it will by default be viewed as a partnership for tax purposes. If you form one alone, by default it is treated a sole proprietorship. In other words, unless you file an election to be treated as a different entity type (using Form 8832), income from your LLC is passed through and should be reported on your individual tax return. But an LLC can elect to be treated as any type of recognized tax entity... so it's up to you.

If your LLC is going to be handled as a sole proprietorship, by the way, you probably don't need an EIN -- unless or until you have employees (or treat yourself as one).