As an owner of a limited liability company you are not considered to be an employee. You are instead, a self employed business owner whether you have full stake in the company or not. If you have invested only a small portion in the company and do not make decisions about its direction or its ...

As an owner of a limited liability company you are not considered to be an employee. You are instead, a self employed business owner whether you have full stake in the company or not. If you have invested only a small portion in the company and do not make decisions about its direction or its future, then you may be exempt from having to pay this tax. 

LLC self employment tax is filed by each member who pays taxes on the amount that is technically due to them. As a self employed business owner the LLC members are not subject to withholding for instance, but will be responsible for making their own tax payments. The way that this tax is figured is by using an estimated amount of yearly profits and then making quarterly payments on them. These payments are paid in April, June, September and January for the year. For instance, taxes for the year ending December 2009 would be made in April, June and September 2009 and January 2010. After the last quarterly payment is made in January the coming year’s profits will be estimated and the amount divided by four for that year. 

LLC income tax is filed using schedule SE. It should be noted that LLC members pay up to twice as much self employment taxes as the regular employees do because of matching contributions. Whatever the employee pays in self employment taxes the amount will be matched by the employer. However, half of that amount can be deducted from taxable income by the employer at the end of the year. In addition, the LLC member can deduct the cost of expenses for the business on the income tax return, bringing their total taxable amount down substantially. Allowable deductions can include start up costs for the business, automobile expenses and travel costs, the cost of various equipment necessary for running the business as well as advertising and promotion costs. 

Some of these deductions can be taken every year while some are only allowable once. For instance, you can only deduct start up costs one time unless you are actually opening a new business every year. In addition, you might be able to deduct amounts for upgrades you have made to the building you rent or own for your business and other day to day expense costs. There are some costs that are not deductible and it is up to the business owner to find out what they can and cannot deduct on their LLC self employment tax forms. 

LLC self employment tax laws as they pertain to each state may be quite different, some states do not charge any LLC taxes, per se but do charge what they call a service fee or franchise fee. The states may also charge an annual registration fee or a renewal fee which can vary wildly from state to state. Some states may only charge a small amount while other may charge a larger fee. In some cases, the fee can be as little as one hundred dollars.