LLC Owner Salary through payroll

SUGGESTED

I work for an LLC. where the owner takes a "salary". This payment as of now is just printed as a check on the fly using an admin salary expense account.

I would like to run the owners time through the payroll module so I can track the cost of his time bidding and supervising different jobs. Has anyone else done this before?

  • 0
    SUGGESTED

    Yes, you can definately do this, and should if he is actually taking a salary which means taxes are involved just like any other employee.  If he is only taking a draw, that is a different story.   Owner draws are not an expense of the company and are also not taxed.

  • 0 in reply to Char DeLange

    Thanks Char! To clarify, the "salary" he takes is reported on his personal tax filing and his taxes are paid then. His draws are handled through a GL account set up for that.  I'm hoping to be able to run his time through payroll without Sage calculating or withholding any taxes from him. I'm thinking that if I de-activate all the payroll calculations for that employee/owner then that should do the trick. 

  • 0 in reply to Lilah Kara
    SUGGESTED

    Except that you will be booking his draws as an expense, which they are not.  Verify with your CPA or tax accountant.  I don't think you can do this legally.  But yes making the taxes inactive will turn them off.  

  • 0 in reply to Char DeLange

    His "Draws" are set up as an Equity and his "Salary" is set up as an Admin Expense. They are indeed kept separate. Thumbsup 

    I'm wondering now if paying out of payroll will mess anything up for his personal taxes since payroll is paid out of a Direct Expense account?

  • 0 in reply to Lilah Kara
    SUGGESTED

    Then his Salary MUST be taxed.  When you book his time to a job, those costs will hit a Direct Expense account and not his Admin expense.

  • 0 in reply to Lilah Kara

    Lilah - If he is a single member LLC it's like being a d/b/a. He can take money as "Draw" but not "Salary" through payroll.

  • 0 in reply to Cindy L.

    Its not a single member LLC. He has an equal partner. I'm not exactly sure what the LLC Structure is, but I have talked to our CPA to make sure we are doing thing correctly as of now and he assured me we were. 

    Maybe I need to have more conversations with the CPA about Direct Expense vs Admin Expense. 

    Our CPA just doesn't have any SAGE 100 Contractor knowledge. I was hoping someone here was in a similar situation and could give me some advice.  

  • 0

    Our owner (we are an LLC) takes owners draws and a salary.   The salary runs through payroll like normal with taxes taken out.   The Owners draws are taken from equity and are not a regular payment.   At most they would be quarterly.   Our accountant stated that if you take draws too often, like biweekly or monthly, the IRS can see that as a salary that needs taxes pulled. 

    If you run his time through payroll, it would pull up w2s and more.  I think it would be more difficult.   However if you need to track time, I would suggest that you talk with the owners about doing a smaller salary through payroll and increasing draws.