Paying an LLC member via Square Payroll: no quarterly contribution report for unemployment insurance

[JumpinAK]

How do you set it up to pay a member of the LLC through square and not have the reported on the quarterly contribution report to the state for unemployment insurance?

[isabelle]

Hey @JumpinAK! ✨✨✨

Thanks for posting in the Seller Community. 

Good question. I want to make sure you get the right answer, so I went ahead and reached out to our Payroll Support team. Hopefully they'll get back to me quickly.

If you're in a hurry, I'm going to suggest that you give our Payroll Team a call tomorrow. 

Please feel free to circle back to this thread with your findings. I'll do the same. 

[isabelle]

I looked into this further and it sounds like you're wanting to pay a contractor that is using an EIN, which we currently do not support. While you are able to pay contractors through Square Payroll, and contractor wages are not included on quarterly or annual reports (including those for state unemployment insurance), we require that the contractor provide an SSN.

Does that answer your question @JumpinAK

[GroveandBaker]

No, what they're wanting / asking to do is pay themselves through payroll as an LLC Member. LLC Members are not employees but instead LLC owners. LLC's are pass though entities meaning all revenue (-expenses) is passed on to the members. Members report all income to IRS on i believe their partnership return. We are an LLC so have dealt with this for the past 12 years. Moving forward we are going with an S Corp election status and our members will now be able to be employees, get payroll, and have the perks of employment if ever needed (W2's helpful when trying to refinance or acquire a mortgage, disability, unemployment..).

LLC Members take Draws / Distributions and those are not taxed. You will however pay taxes on profits even if you never take the money out of your banking account.

hope this helps.