taxes, llcWe are a newly formed LLC in Virginia and want to get a grasp on how to pay ourselves, handle taxes for ourselves, and handle taxes for the business itself before we start cashing checks and paying ourselves. We each own 50% of the company.
First off, you really want an accountant. It’ll cost you a bit each quarter, but someone else will be worrying about the soul draining and esoteric arts of bookkeeping, you’ll have someone around who can answer this type of question, and you’ll be very happy the day you get your first tax audit because your accountant will be the one dealing with the taxman and explaining your figures.
As to your specific question, you pay corporate income taxes on your profits. So if you pay yourself everything you’ve earned as salaries and bonuses there basically isn’t any corporate profit to tax. If, by contrast, you pay yourself in dividends, you’ll need to pay corporate income taxes and then pay taxes on capital gains. (Also beware that taxmen usually have a dim view of entrepreneurs who try to keep their taxes low if the latter is more favorable.)
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