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Can we talk about how I tried to save on taxes by paying myself a tiny salary from my LLC?
I paid myself $500 a month for a year thinking it would lower my tax bill, but my CPA in Tampa just told me it actually created a bigger self-employment tax burden and I should have just taken owner's draws.
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susan_allen6mo ago
Wait, you only paid yourself $500 a month?
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gray3146mo ago
Yeah, $500 a month felt like a victory lap after the bills got paid. I was living on ramen and optimism, convinced I was building equity. Then tax season hit like a truck, just like Sullivan.Quinn said. I owed more than I made, all because I didn't understand the difference between a salary and a draw. My accountant just sighed and showed me the line for self-employment tax.
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sullivan.quinn6mo ago
Yeah, did the same thing my first year. Got killed on taxes.
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fisher.jessica6mo ago
My buddy's accountant said the same thing about his LLC. The salary triggers payroll taxes you could avoid with draws. It's a common mistake for new business owners.
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