Is the sole owner of an LLC, who pays himself a salary, supposed to pay FUTA on himself?
As his mother doing the admin work, I found IRS info that says no FUTA on my wages since I’m the parent of the owner, but it said nothing about the owner himself being exempt– but it would make sense since I’m exempt and his spouse would be exempt… and if he isn’t, wouldn’t that be a conflict of interest to potentially lay himself off and collect unemployment?
My sincere thanks for your help!!
Thanks for the question. I’m not a FUTA expert, but I imagine you are correct that the owner of an LLC is probably exempt from FUTA. This is probably at least partly due to the fact that the IRS does not recognize the right of LLC owners to pay themselves a salary. Any money that owners take from the company is considered a draw. They’ll still owe income taxes and self-employment tax, but given that the IRS doesn’t classify this as a salary, I doubt he would be eligible for unemployment if he became “separated” from his employment with his own company.
I hope this helps. You may want to check with a certified accountant if you have more specific questions.