Is it okay to issue myself a 1099 from my LLC, of which I'm the sole owner?
I own a small publishing company and occasionally publish my own books. I want to track royalty expenses on the products I've written, so my plan was to pay myself royalties, book it as a royalty expense and then issue myself a 1099 for the royalties paid, so that my taxes balance (the LLC profits offset by the royalty expense would be balanced because the 1099 would add that amount back to the profits when I report my total profits). I'm the sole owner of the LLC and it's a disregarded entity for tax purposes.
Is this appropriate? Is there another way I should handle it? Maybe use a non-posting account?
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Since its an LLC, a disregarded entity, you won't have anything to balance. LLC income is your income.
You may do that, but I think it just adds to the accounting costs and complexity. You'll be filing a 1099 with your own (through LLC) EIN as the payer and your own again SSN as the payee, without any benefit I could think of.
If you want to track - just use a separate account in your books for this money, it doesn't have to be tracked through IRS necessarily.
That's my opinion, but I'm not a CPA or a professional in this field, I might be wrong.
If your LLC is treated as a corporation, as mine is, it is a separate entity. It's income in not necessarily your income.
As long as you accurately report your total profits, it's okay. That means whatever is booked to royalty expense and paid to yourself by check, will need to be reported by you as income to the IRS -- because in booking the expense, you're reducing the total profits of the LLC.
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