"Compensation of Officers" for single-shareholder LLC w/S corp. tax treatment?

Your amounts are so small, they would never hit the IRS "radar.' They are looking for people who earn substantially more, say $30,000, $50,000 or $100,000 and pay no payroll to avoid all payroll taxes. Those "hogs" get slaughtered. All of their S Corp "dividends" can be reclassified as salaries. They usually don't go after people who pay a "reasonable" salary. Yours seems very reasonable to me, but again it is so small, it would never hit their "radar.' They have much bigger fish to fry.

Jim Kirby, CPA

It's really immaterial. Any remaining profit will flow directly to your personal return since you're treating it as an S-Corp. (Contrary to what another posted, it will be subject to SE taxes.)

What I'm curious about is why you would set up an LLC for this type of venture. There's no tax advantage -- in fact state taxes are often higher -- and your business doesn't seem to be risky enough to warrant LLC treatment. And why would you complicate a single-member LLC by treating it as an S-Corp? Sorry, but that's just absurd!

In majority of cases, this would have been done in this way:

Do the translation work. Keep record of income and expenses. Then with your tax return file schedule C (Form 1040) Profit and Loss from Self Employment to report your income and expenses to figure out net profit. The net profit (or loss) will be added to the other income and is taxed. This income is also subject to SE tax at 15.3%.

Now if someone want to be safe from legal problems, then he/she will register it as a Single Person LLC, which is for federal tax purpose same as sole-propertier who files schedule C.

Why would someone want to make single person LLC treated as S-corporation? S-corp files its return, distributes its profits to its share holders and issues form K-1. A sole shareholder will report the entire profit as income. K-1 income is subject to self employment tax at 15.3%.

as a partnership all profits/losses, donations, depreciation etc flow thru to the partners and partners are not employees, they will file their Sch C on the profit that is shown on the K1 from your story I am not sure you understand the structure either employers have an EIN and file quarterly taxes and reports on the employees of the company, and issue year end reports, including w-2's to the employee A Circular E will be necessary to determine how much income tax, and other taxes are required to be withheld per payroll and as such, State ID # is required as well

I don't get it. If you have S corporation treatment, why not treat all of the earnings as dividends and avoid employment taxes on your earnings?