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  #1  
Old 07-16-2005, 07:32 PM
Amil Amil is offline
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Federal Withholding...how for LLC

I use Quickbooks for my small LLC. I have no payroll..just $ coming in, expenses, and member equity.

I recently had income via foreign country and a US agency automatically did a federal withhold.

Can I easily show the income along with federal withholding somehow (general journal)? I don't even see an account for withholding...do I have to create one?

Amil
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  #2  
Old 07-17-2005, 07:35 AM
Joey Joey is offline
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An LLC is not regognized for tax purposes at all. You will just be filing a 1040 tax return and reporting the income on your Schedule C as if you are a Sole Proprietor. The LLC is a State recognized entity for liability purposes.
This is an unusual situation and be aware that this US company is going to send you a 1099 Form at year end with the tax withholding information shown and it will need to be ATTACHED TO to your tax return. So be sure to watch for it at tax time.
As for telling you how to record the transaction, I first need to know how you normally record the sales coming in. Do you just use the Make Deposits screen or do you issue Invoices, Sales Receipts, or what? How do you normally record your income?
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  #3  
Old 07-17-2005, 08:10 AM
Amil Amil is offline
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Thanks Joey. This does make sense as I was notified that I'll get a 1099 from the company (they collect foreign copyright fees). For my domestic services, I normally create invoices and just do a "Receive Payments" when the $ comes in. For this situation, I suspect I'll just do a deposit or GJ entry to show the income from the sale to some related income account.

From what I'm thinking, I DO NOT need to record, now, anything in regards to how much for federal withholding. I'll just show that at tax time on my return. If fact, doesn't sound like the federal withholding will ever show up in QB. Sound correct?

Amil
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Old 07-17-2005, 08:19 AM
Joey Joey is offline
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I think what they're telling you is that they are going to withhold Foreign Taxes, not Federal Income taxes. When you Receive Payments, use the full amount so you can clear your Invoice from the Customer. He really did pay the full amount. The taxes came out later. When the payment goes to the Make Deposit screen, add a new line at the bottom of the deposit and select the Owner's Draws account. Type Foreign Taxes Paid in the Memo area and fill in the amount as a MINUS to reduce the deposit to what actually went into the account.
The reason that you can't just expense it to Taxes expense is because Foreign Taxes are shown on a completely different area of the personal tax return. Either on Schedule A: Itemized Deductions or on the Foreign Tax Credit Form as a tax reduction credit. If you type that Memo, it will be easy to spot at tax time.
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  #5  
Old 07-17-2005, 01:01 PM
Amil Amil is offline
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I hear what you are saying, but it isn't a foreign tax that was withheld; the form I received indicated what was withheld was a "US Withholding Tax".

Amil
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  #6  
Old 07-17-2005, 03:35 PM
Joey Joey is offline
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Then do the same thing and type Federal Tax Withheld in the memo area. The rest is the same.
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