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chonglee
Level 1

How do I setup payroll, for a sole proprietorship LLC? No EIN, just SSN. No state (CA) employer number to enter. IRS and CA withholding should be zero, right?

 
3 Comments
john-pero
Community Champion

How do I setup payroll, for a sole proprietorship LLC? No EIN, just SSN. No state (CA) employer number to enter. IRS and CA withholding should be zero, right?

Sole proprietors and LLC members are NEVER  on payroll. Your own work is not compensatable as a businesscexpense and your business profit or loss is passed through to you and reported on your personal returns.

 

Your "pay" is considered an advance against the pass through profits and is called member draw, an equity account.

 

You only need payroll if you have actual employees, which does not count yourself. And if you have even 1 real employee you do need a FEIN.

 

CA may be different, and LLC is a state designation, but the sole purpose of a LLC is liability protection of personal assets and a LLC is a new entity and even a single member LLC should have a EIN separate from SS for this protection and separation from your personal stuff

john-pero
Community Champion

How do I setup payroll, for a sole proprietorship LLC? No EIN, just SSN. No state (CA) employer number to enter. IRS and CA withholding should be zero, right?

Set up 3 equity accounts (QB defaults with just 2)

 

Member Equity

Member Contributions

Member Draw

 

These are equity accounts. Also suggested is make these three sub accounts of a master equity account that is not pisted to but acts as a summing account.

 

Money you put in or pay for business items with personal funds is Contributions. ANY AND ALL money you take out is Draw.

chonglee
Level 1

How do I setup payroll, for a sole proprietorship LLC? No EIN, just SSN. No state (CA) employer number to enter. IRS and CA withholding should be zero, right?

Thanks John.  That was super helpful (and FAST).  You can tell I am new to this.  And I have been procrastinating on EIN, I will do it...

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