Quick question on RE LLC compensation for member doing the books,

[Josh Dehmlow]

OK, probably NEVER a "quick" question and answer concerning tax, $, etc. But I will try to make it simple. What is the simplest way to compensate one member (of a 2 member-mamged 50/50 LLC that has a couple rentals) for doing the monthly books, record keeping, form filing, etc.

Let's say it was agreed to be $100 a month. Could that be a simple LLC expense? 1099 income for that member ? we did not want to have a situation where that member was now considered an employee. Thanks for any input or suggestions or entirely different options! : )

[Ashish Acharya]

@Josh Dehmlow , 

The easiest way to do is via Guaranteed Payment (GP). I also suggest amending your LLC's agreement to reflect this GP.

GP is a deduction on the partnership books  and gets reported on Form 8825 (Rental Real Estate Income and Expenses of a Partnership or an S Corporation) when related to rental real estate property (not on the first page of 1065 as it normally does) and acts as "wage" to partner.  

Partners cannot be an employee of the partnership so there is no payroll. 

The total amount of the GP will be reflected in the K-1 for that specific partner when you file the partnership return. This payment might be subject to SE tax to the partner (Depends if the partnership activity is just a rental). 

Hope that makes sense.