I work for a small Multi-Member LLC providing consulting services (to the Government) in California.
Would it be correct in saying at the end of the year, any cash that the LLC wishes to keep in reserves for the future (e.g. in case we lose a gov't contract and need to keep an employee on overhead, saving for a facility, saving for a company event, etc), will be taxed evenly amongst the members/distribution amounts. As such, the tax on the cash reserves will essentially be 35% (fed tax rate) + 9% (CA tax rate) + 2.35% (medicare) = 46.35%?
Taking it one step further, if we use that cash in the following year to cover an employee's salary (who becomes uncovered on a gov't contract for a few weeks), then that already taxed cash will be further taxed to the employer (FICA/social security) and the employee (regular fed/state taxes)?
Any guidance or opinions would be greatly appreciated!