Ways to Pay Yourself from an LLC
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Single-member LLCs:
- Owners can take draws from profits.
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Multi-member LLCs:
- Partners divide draws and distributions based on partnership or corporation designation.
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LLCs Taxed as Corporations:
- Owners must take salaries meeting IRS requirements, in addition to draws.
Percentage and Timing of Payments
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Estimated Taxes and Savings:
- Consider setting aside 5 – 10% of earnings for savings.
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When to Start Paying Yourself:
- When the business starts turning a profit.
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Types of Payments:
- Options include draws, salaries, or a combination of both.
Best Practices for Paying Yourself
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Owner’s Draw for Single and Multi-Member LLCs:
- Access a portion of the business’s cash reserves for personal use.
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Tax Considerations:
- Pay income and self-employment taxes on money received from the LLC.
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Factors to Consider:
- Simplicity, liability protection, and tax implications in choosing payment methods.
Recommended Resources
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Guides for Managing LLC Finances:
- Check our guide on estimated taxes and how to calculate/pay estimated tax.
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Professional Services:
- Consider using services like Northwest for LLC formation and tax compliance.