Do business owners need to be on payroll?

If you are the owner of a single-member LLC or a sole proprietorship, you generally do not need to run payroll for yourself because you are not considered an employee of the business. Instead, you will report your income and expenses on your personal tax return using Schedule C (Form 1040) or Schedule F (Form 1040), and pay self-employment taxes on your net income.

However, if you have elected to have your LLC taxed as an S corporation, you may be considered an employee of the business and may need to run payroll for yourself. This is because S corporation owners who perform services for the business are generally required to take a reasonable salary and pay payroll taxes on that salary.

The team at Austin Tax Advisors can help you determine if you need to run payroll for yourself and guide you through the process if necessary.