Another tax question (1099-MISC)

superchuck500 said

Fair enough but I don't think that's the right analogy. You wouldn't pay a lawyer to go change your voter registration.

All I have to do is fill in name/address/taxID info and then fill in the amount of non-employee compensation. There were no withholdings or anything like that. It's literally one box.

Another question: I know that I can pay myself (from the LLC to me individually) a small but reasonable amount for tax preparation for the Schedule C. But do I then have to report the same amount as income on my 1040? Is there any reason to do this - as the 1040 income and schedule C income for an LLC are all basically the same thing for tax purposes?

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Generally single member LLCs are treated as disregarded entities for federal tax purposes which is why you are able meet your compliance obligation by attaching an additional schedule (Sch. C) to your personal income tax return (Form 1040). As such you may not take a deduction for payments made to yourself even for tax return preparation.

However, what may be advantageous for you is to elect for your LLC to be taxed as a corporation and then make the S election so that the earning aren't taxed twice. This will require you to file an additional tax return for the business (1120S) but you then be able to pay yourself a reasonable salary since we are now talking about 2 individual entities (the LLC and you individually) as opposed to 1 taxable entity.

The other benefit of this is that any taxable income the business earns in addition to the reasonable salary you pay yourself will not be subject to self employment taxes. As you currently have it set up, the taxable income on the Sch. C will be subject to the 15.3% tax (half of which you can take as a deduction on page 1 of the 1040).