All Forum Posts by: Account Closed

Complete newbie here! My husband and I just started an LLC. We are each depositing the same amount as capital contribution so that our ownership is each 50%. My questions are: 1) How do we pay ourselves once we have money coming in? Is it based on our percentage we own? I know that I will need to cut us each a check for the same amount to keep it equal. 2) Does it matter how often: monthly, every other week? 3) When you pay yourself from profits, does it come out against the capital account? 4) Since we want to be taxed like a sole proprietor/partnership rather than a corporation, we don't have to pay ourselves with a W-2 and withhold taxes right? I have so much experience as a sole proprietor and now am completely confused and back at square one. I appreciate everyone's responses :)

@Nancy Zhao I am wondering more about how much the SC taxes would be if we live-in flip vs. being a sole proprietor after we sell.

I have the federal taxes understood on this, but what about South Carolina tax? If we live in the home while fixing it up and sell, what percentage would we have to pay to SC for short term capital gain? And if we don't live in it, and do it as a self-employed business, what percentage would we have to pay to SC for short term capital gain? Also would we have to pay SC a self-employment tax like to the IRS?

I'm just curious if we'd be subject to paying self-employment tax if we live in each one while we flip it. If we do 2 a year, I just wonder if they'd consider it a business even though it's our residence. And if I got this correct- the cost basis would be less because it would be our home we're fixing up, rather than it being our business so every expense would be deductible.

We're selling our home and want to use the cash to invest in a small house to flip. So, if you live in a house for 6 months, fix it up, and sell it- it's my understanding that we will have to pay the short-term capital gain tax. But what if we keep doing it every 6-7 months? Will the IRS have a problem with that? Will we be considered a dealer even if we're living in it? Also would we need to have an income outside of doing that?