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In the middle of 2016 I quit my job and started a small LLC, working as an independent contractor. I'm now shamefully confused as to how my taxes work, but my account did my actual filing. I still have to pay, but I don't know whether to pay from my personal checking account or my business checking account.

I'm especially confused as to what the taxes are for me the owner versus the taxes for my business itself. Can someone explain how this works like I'm a child, or point me to a good resource?

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Payment of taxes for your personal return filed with the IRS always come from your personal account, regardless of how the money was earned.

Sales tax would be paid from your business account, so would corporate taxes, if those apply; but if you're talking about your tax payments to the IRS for your personal income that should be paid from your personal account.

Also, stating the obvious, if you're paying an accountant to handle things you can always ask them for clarification as well. They will have more precise answers.

EDIT Adding on for your last part of the question I missed:

In virtually all cases LLC's are what's called a pass through entity. For these entities, all income in the eyes of the federal government passes directly through the entity to the owners at the end of each year. They are then taxed personally on this net income at their individual tax rate, that's the very abridged version at least. The LLC pays no taxes directly to the federal government related to your income.

Here's a resource if you'd like to learn more about LLC's: http://www.nolo.com/legal-encyclopedia/llc-basics-30163.html

  • One of the best answers I've gotten from any stackexchange site. Also, my accountant is a smart and helpful guy but he sucks at dumbing things down for me. – Ben Apr 27 '17 at 4:53
  • Thx. Took a couple edits, but I think I finally got there! LOL. Nolo is a decent resource for basic business knowledge if you feel like exploring. Unfortunately, some of the nitty gritty details vary from state to state. – Keith Apr 27 '17 at 4:55
  • FWIW, I had to start running payroll through my LLC this year and do so quarterly. When I do, I just bump my additional withholding up to the amount of quarterly payment that is needed. This makes the documentation and the process a bit easier. – Pete B. Apr 27 '17 at 12:02

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