How to Pay Yourself in a Single-Member LLC
As the owner of a single-member LLC, you pay yourself by taking money out of the LLC’s profits as needed. That’s called an owner’s draw. You can simply write yourself a check or transfer the money from your LLC’s bank account to your personal bank account.
Your single-member LLC is a “disregarded entity.” That means your company’s profits and your own income are one and the same. At the end of the year, you report them with Schedule C of your personal tax return (IRS Form 1040).
Setting Salaries in Multi-Member LLCs
When setting your salary from a multi-member LLC, consider each member’s contributions, company interests, and the most equitable way to divide the payments. One option is to provide regular, equal payments to all partners.
Paying Yourself in C Corp or S Corp
The advantage of paying yourself as a C corp or S corp is that you can reduce your liability for self-employment taxes by paying yourself a reasonable salary and taking some LLC profits as dividends. The IRS defines reasonable salary as the amount someone doing similar work would receive in the same industry and location.