Article Date:
June 2011


Word Count:
540

 

 

Does the Proprietorship Exemption from Payroll Taxes Apply when the Owner of a Single-Member LLC Hires His 15-Year-Old Child?


No! Here’s why.

 

The single-member LLC is

 

1.

a proprietorship for federal income tax purposes and

2.

a corporation for federal employment taxes (FICA, Medicare, and federal unemployment).

 

The Proprietorship

 

For income taxes, the IRS treats the single-member limited liability company (LLC) as a disregarded entity.1 Therefore, the single-member LLC files its federal income tax return as a proprietorship on Schedule C of IRS Form 1040.2

 

The Corporation

 

Unlike the income tax, for federal employment tax purposes, the IRS does not grant disregarded-entity status to the single-member ... Log in to view full article.

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