What is the procedure for a single member LLC owner to pay himself. I know that an LLC owner is expected to take draws, but if they wish, can the owner set themselves up as an employee and make payroll payments to themselves, thus covering taxes at the time?

ANSWER

The BIDaWIZ Team's Answer:

Single member LLCs either can be treated as a disregarded entity or corporation. By default it's a disregarded entity, so we'll assume that's the case here. Tell us if that isn't because that can change our answer. It's incorrect for a single member LLC owner to do payroll in the same fashion as a W-2 employee. Rather, they should be paying estimated quarterly tax payments throughout the year and reporting their business income and expenses on form 1040. If they did payroll, they need to file correct W-2 forms to fix the problem. It doesn't appear as though he is doing it correctly given he's a disregarded entity.