Does a two-person LLC need to set up payroll for owners?

Thanks for explaining! So if we stick with the default partnership taxation, we just take draws when needed and then pay taxes on our share of profits at tax time? Also, does this mean we need to make quarterly estimated tax payments since taxes won't be withheld?

Exactly! With partnership taxation, you can simply take money out as needed through owner's draws. Just remember you'll each pay taxes on your share of the profits regardless of how much you actually withdraw. Yes, you'll likely need to make quarterly estimated tax payments since you won't have taxes withheld. You'll need to estimate both your income tax and self-employment tax (which covers Social Security and Medicare). The current self-employment tax rate is 15.3% on the first $168,600 of net earnings for 2025.

That sounds helpful! Did it give you specific advice about your state too? I heard LLC rules can vary by state.

I'm suspicious of these online services... did it actually help with the quarterly payment calculations? That's the part I've been struggling with most.

It definitely included state-specific guidance which was super helpful since my state has some unique LLC requirements. The service showed exactly which forms we needed to file and when. For quarterly payments, it was a game-changer. It analyzed our projected income and calculated the recommended quarterly payments based on our specific situation. It even gave us a schedule of when payments were due and how much to pay. We've never missed a quarterly payment deadline since using it.

Wait, so this service actually gets you through to a real person at the IRS? How does that even work? The IRS phone system is literally designed to be impossible to navigate!

Yeah right. Nothing can get you through to the IRS these days. I've literally tried calling 30+ times this year. If this actually works, I'll eat my hat.

It works by holding your place in the IRS phone queue so you don't have to. Their system navigates all those annoying IRS menus and waits on hold, then calls you when they get a real person on the line. It's basically like having someone wait on hold for you. No joke, I was shocked too. I'd spent literal hours trying to get through before. With Claimyr, I went about my day and then got a call when they had an agent ready to talk. The IRS person answered all my LLC questions and walked me through the exact filing requirements for our situation.

Thanks for mentioning this! We're in Texas, so I think we're OK on the franchise tax for now since we'll be under the threshold, but I'll double check. Do you think QuickBooks is worth it for a very small operation? We're just starting out and trying to keep costs down.

For Texas you're in good shape, but definitely verify the current thresholds to be safe. On QuickBooks, I actually think it's worth it even for small operations because it saves so much headache at tax time. There's a basic version that's not too expensive (around $25/month), and having clean books from day one saved us thousands in accounting fees and headaches later. If you're really tight on budget, Wave is a free alternative that works OK for very simple setups.

What kind of licenses did you need? I thought the LLC formation was all you needed.

It depends on your business type and location! The LLC formation just creates your legal entity, but you might still need a general business license from your city/county, and potentially industry-specific permits. For example, if you're doing food service, contracting, professional services, etc. - each has different requirements. Check with your local city hall or county clerk's office about what's required in your area. Some cities have online portals where you can search by business type.