Louisiana LLC Tax Question

LLC is considered a "disregarded entity" for tax purposes...simply put, it is treated as sole proprietorship and filed on the schedule C of your 1040. Meaning you will in fact have to pay SE tax on any profits of the business. Plus you would have to an income tax...how much income tax? Well depends on how much your other taxable income is and what your avg tax rate is.

Only way out is through an S corporation, but you have to pay yourself a salary anyways, so for $25,000 not really worth doing an S corporation....start profiting $75,000 and you got a different story.

There is also a C Corp...but we wont even go there for this example.

The question is will this be your only income or additional income? If it's your only income, then you will get taxed at the $24,999 rate. If it is additional income, then you will get taxed at the $24,999 + your additional income rate. This is for all salary wages, of course, which as CajunSaint explained, all of it will become in effect flow through salary with a standard LLC since I assume it will be a sole ownership LLC. If you structure your LLC as an S corp, you are allowed to split your income into salary and profit distribution. Salary portion will be taxed as described above and is actually subject to employee & employeer taxes. The profit distribution is un-taxed to your company, but flows into your tax return as additonal non-salary income, the same as any other stock earnings would. These earnings are subject to income tax, but not MED or SS. The stipulation is that you have to pay yourself a reasonable salary before you can pay yourself proft distribution. This is why, as CajunSaint pointed out, that for $24,999, it's probably not worth it to go this route, but you could always change to an S-corp in a future year if your company's income increased.