[nabentre] setting up a partnership or LLC

[Michael Baldwin]

Yes it is possible, but you might not want to do it that way.  If you're an
employee, the partnership will need to pay Federal and state unemployment on
you.  The partnership will be responsible for half of your social security
and Medicare withholding, and you the other half, which isn't a big deal,
cause you will pay the same amount as self employment tax if you are self
employed.  There is just more work involved in depositing the withholding,
social security, and Medicare taxes to the IRS.  Then your state
withholding, if you have state income tax, will be made according to your
states regulations.

As a partner in the partnership, you will also receive a form at the end of
the year with your share of the partnerships income, and you will need to
claim that as income.  So, in reality it will cost more, and be more work if
you go with a partnership, LLC, Corp, or S Corp.

When your self employed, the SSA, from the way I understand it, gets a
projected P&L statement from you for the year, and base what they pay you
off that, then at the end of the year, you send them what your actual P&L
for the year was, and they adjust it accordingly.  So it would not be a
month to month fluctuation, just a year to year.

This example might not be your exact situation, but it should give you an
idea.
Let say you gross $3000 a month $36000 a year from your business.
Your social security and Medicare will be $5508, 15.3% of your income.
Federal tax at $5400, 15%, this will depend on your tax bracket.
$1800 for your state tax 5%, again depends on your state and tax bracket.
That brings you to $23292 before any business expenses.  That is 1941 each
month.
You would only need a little over $300 a month in other expenses to get this
down below $1600 a month, or whatever the cut off is for SSDI now.

Of course this is just an example, you will need to sit down and do some
projections on your income and expenses.  If you want help, you can e-mail
me privately,  I have been a bookkeeper for about 8 years.






Michael Baldwin
Got print, need Braille?
http://www.ReadWithDots.com

-----Original Message-----
From: nabentre-bounces at nfbnet.org [mailto:nabentre-bounces at nfbnet.org] On
Behalf Of slery
Sent: Friday, May 15, 2009 6:32 AM
To: 'NFBnet NAB Entrepreneurs Mailing List'
Subject: [nabentre] setting up a partnership or LLC

Is it possible to set up a partnership with a family member that would then
allow me to be an employee and have the company pay me a check?

My concern is that as a sole proprietor my income will vary each month and I
do not want lose my SSDI totally. If have a job that pays me $2000 one
month, and then the next month a few jobs that only net $1500, it would be
really hard to pay my bills and cover a medical policy.

I'm trying to make sure that I line everything up properly before I plunge
ahead.

TIA,
Cindy



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