As the owner of an LLC, how are my taxes calculated?
I haven’t owned my LLC for very long (just two years) and I’m still a little confused as to how my taxes get calculated. My tax guy tried to explain it to me but I just got confused so I’d like to give it another shot.
Right now I’m a consultant so I don’t sell a product or anything (no sales tax). The LLC tax liability is pass-through so it goes to my personal taxes.
So if I invoice my client for a project and the invoice is for $1,000 I put 30% in the business savings account for taxes leaving around $667 dollars in the business checking account. Then I do a draw for $100 dollars as my ‘paycheck’ which goes to my personal checking account.
So how are these taxes calculated. Based on what my company was paid in the invoice ($1000) or based on my draws ($100) ???
This question is in the General Section. Responses must be helpful and on-topic.