If I am a sole owner LLC, do I use an owner equity account for estimated federal income tax and and both parts of self-employment tax payments?

cdbetts2001 · ‎April 03, 2022

I understand that the owner's federal income tax liability is not a business expense but what about the employer side FICA tax?

Rainflurry · ‎April 04, 2022

@cdbetts2001

I assume you are taxed as a sole proprietorship? If so, you record all money taken out of the business as draws from your owner's draw equity account. You do not record the employer-equivalent portion of self-employment as a business expense - you take that deduction as a reduction of your adjusted gross income on your personal return.

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Rainflurry · ‎April 04, 2022

@cdbetts2001

I assume you are taxed as a sole proprietorship? If so, you record all money taken out of the business as draws from your owner's draw equity account. You do not record the employer-equivalent portion of self-employment as a business expense - you take that deduction as a reduction of your adjusted gross income on your personal return.

cdbetts2001 · ‎April 04, 2022

Yes, I file a Schedule C. Thank you for clarifying this for me.

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If I am a sole owner LLC, do I use an owner equity account for estimated federal income tax and and both parts of self-employment tax payments?