united-states tax-law corporate-law
LLC self-employment taxes
<p>I'm about to start a small business and am going to do it under an LLC (sole proprietorship in federal tax eyes). I had assumed a much heftier tax rate around ~30% but I'm seeing just tax for self-employment which comes to around 15-16%.</p>

<p>Is that all the tax that I'd owe on my company income which in essence "flows-through" to me?</p>

<p>You don't owe any federal taxes on a sole proprietorship LLC.  (And hopefully you formed the LLC in a state that doesn't impose any taxes on LLCs or their assets.)</p>

<p>As you said: For tax purposes all of the company's income passes through to you personally, and you are personally responsible for paying taxes on that income.</p>

<p>"Self employment tax" is just another way of saying that you have to pay full FICA tax on earned income.  In contrast, if you have a "traditional" employer the law requires that employer to pay half of your FICA taxes.</p>
