Paying myself from my LLC, which category is used?

This discussion was created from comments split from: Paying myself from my LLC, which category is used?.

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  • onstilt
    onstilt Member ✭✭
    I too would like to know the answer to this question. Except that I am just a sole proprietor and I also have people that contract for me.
  • NotACPA
    NotACPA SuperUser, Windows Beta Beta
    edited January 2020
    HOW are you paying yourself?  Are your personal taxes and those of the LLC  filed with the same tax return?  OR, does the LLC file a separate tax return?
    If the same tax return, that means that you and the LLC are a single tax entity, and there's no "paying yourself" because you're one tax entity.  You're just moving money from your LLC pocket to your personal pocket.  No different than moving your wallet from one pocket to another.
    IF the LLC files it's own tax return, then the LLC finances in Q belong in a separate Q data file, where the payment to you is an expense and the income that you receive is recorded in your Q data file as income.

    And by "people who contract for me" do you mean that they hire you on contract or that they work for you on contract?
    Lastly, what Q product and what BUILD of that product do you run?  Do HELP, About Quicken for this info.
    Q user since DOS version 5
    Now running Quicken Windows Subscription, Home & Business
    Retired "Certified Information Systems Auditor" & Bank Audit VP
  • volvogirl
    volvogirl SuperUser ✭✭✭✭
    If you are a sole proprietor you probably file schedule C in your personal tax return for it.  Sole proprietors cannot take a withdrawal or salary and include it as an expense on their tax return. As a sole proprietor, you are not an employee of the business. You don't pay yourself or enter a salary or withdrawal for yourself. All the business income and expenses are your personal income and expenses in the first place. You just fill out a Schedule C. The net profit or loss is your income.  If you have a net profit of $400 or more on schedule C you will pay SE self employment tax on it in addition to your regular income tax. It's all included on your personal 1040 form.  

    So just categorize it to whatever you spent it on or as a transfer to another account.

    For Contract Labor there is either a preset category or you can make one.  Contract Labor goes on Schedule C line 11.  

    FYI - To be included in business reports (and I don't know where else) you have to assign the category to a schedule C tax line item number.  To check the tax line assignment open the Category list by either clicking on the Category Icon or go to Tools-Category List or Ctrl+Shift+C.  Then select the category and right click on it to Edit it.  Click on the Tax Reporting Tab and check the box for Tax related and pick a Schedule C: tax line item.
  • Scooterlam
    Scooterlam SuperUser, Windows Beta Beta
    I have an single member LLC, taxed as a sole proprietor.  In addition to the good advice and insight from @volvogirl  and @NotACPA,  I simply show a transfer from my business checking (where I deposit client payments) to my personal checking.  The category is the [transfer account] name and I always note in the memo that it is a "member's distribution". And btw,  the distribution is in accordance with my LLC Operating Agreement.