Holding and Managing Cash
Yes. An LLC can hold cash. As a separate legal entity, an LLC can open bank accounts and hold cash just like an individual or a corporation. The cash belongs to the LLC.
Taxation of LLC Profits
How are profits from an LLC taxed? LLC members pay personal income taxes on any profits earned from the LLC. Members also pay self-employment taxes on this income. An LLC itself does not pay taxes.
Cash Withdrawals
Can LLC members withdraw cash from an LLC account? Yes. Members of a single-member LLC can withdraw cash whenever profits and cash flow allow. For multi-member LLCs, members must agree on the timing and amount of cash withdrawals.
Separate Business Bank Accounts
Should an LLC have a separate business bank account? Yes. Having a separate bank account helps demonstrate the LLC is a distinct legal and financial entity, which helps protect members from personal liability.
Retained Profits
Can an LLC retain profits instead of distributing them? Yes. An LLC can retain profits instead of distributing them to members right away. Retained profits remain the property of the LLC. Members pay taxes when profits are eventually distributed.