How do you pay yourself as LLC owner

[SOCOM]

So I registered a business with my business partner through my federal government and now comes the question of pay. Before we open our ecommerce store for business, we need to discuss how we are going to get paid (salary or dividends). I wanted to hear from other business owners what they do or what they recommend. thanks!

 

[nativepro]

An llc doesn't have shareholders, so you can't get dividends. If you have 2 members at 50/50, then you're taxed as a partnership. You need to setup a corporation if you want the option of a salary or dividends.

 

[SOCOM]

I'm from Canada so we don't really have LLC, it's called corporation, that's what I'm registered as (I didn't want to make a longer title and thought they'd be similar).

 

[nativepro]

Ah gotcha...in that case I would talk with an accountant. He/she can go over the different options with you, and based on your earnings estimates, give you the best solution to pay the least amount in taxes.

 

[SOCOM]

Thanks. Just wanted to check if BHW had some black hat knowledge about this if you know what I mean.

 

[Cshark]

Black hat knowledge about splitting the profits of LLC? Am I reading it right?

 

[4kbmcc]

I suggest paying yourself without deductions and then paying quarterly taxes. I assume you are a US resident. Also, if you're making any money consult with a CPA. It's worth it

 

[b1step-ahead]

LLC'S can be taxed as a corporation or sole proprietor. If your a single memeber llc, just you, then its pretty easy. An exception is that if your wife is involved, it can still be taxed as a sole proprietor, the income comes from income minus expenses (you can really hide your money). Now as a partnership your a llp limited liability partnership. You have to figure out if everyone is a member or manager. If your pulling in 20k a month minus expenses than you have have a salary and re-invest the rest. If your by yourself, you can figure it out. But if a partner is involved, do yourself a favor and go see a lawyer or accountant.

 

[Deleted member 264944]

Pay all operating expenses, and what you have left over is your 'NOI' net operating income. then pay your taxes.

 

[GauravJ]

By way of allowances and Director's fees

Also check respective countries companies law and taxation rules to get most benefit out of it.

 

[Moneyman94]

A simple structure that has worked for decades is to have a nevada "C" corp. Also set up an LLC or LP in the state you are doing business in. The LLC hires the corp as a management company. The C charges a monthly management fee. Then you are paid in the form of reimbursments for monies you spent to keep the business running, as an example you can get reimbursed for any medical expenses you incur that are not fully covered, you can set up a college reimbursement program for your kids, I mean your employees, I think you get the idea.

 

[Monetizesocial]

Its pretty simple since the profits pass through... Consult with your CPA, they can set you up pretty quick.

 

[trafficsource]

pretty easy: profits have to be equal for "expenses"

 

[reallife]

A simple structure that has worked for decades is to have a nevada "C" corp. Also set up an LLC or LP in the state you are doing business in. The LLC hires the corp as a management company. The C charges a monthly management fee. Then you are paid in the form of reimbursments for monies you spent to keep the business running, as an example you can get reimbursed for any medical expenses you incur that are not fully covered, you can set up a college reimbursement program for your kids, I mean your employees, I think you get the idea.

This is exactly the setup I use, I have an LLC and an S-corp, and they both pay the C-corp management fees as "pass throughs" - as others have said, see an accountant for the best suggestions on your situation, though.

 

[Moneyman94]

This is exactly the setup I use, I have an LLC and an S-corp, and they both pay the C-corp management fees as "pass throughs" - as others have said, see an accountant for the best suggestions on your situation, though.

Just be careful with the CPA you chose. Too many of them have no idea what they are doing when it comes to business. I got screwed my first year with a real winner.

 

[Ebcompany]

mine is setup as a class s elected LLC....I pay myself a salary, but it varies, its not a set salary....depends on how the income was that month and if the other LLC members want to put more back in for growth or take more out as pay.......I would not worry so much at the moment about the pay "setup" as much as generally making an agreement that once the capital accounts reach X amount of dollars that you will distribute the excess in appropriate amounts to percentage ownership.

 

[infoasian]

Make sure to setup a foreign entity in a tax-free country and pay licensing fee to them.

 

[Moneyman94]

Make sure to setup a foreign entity in a tax-free country and pay licensing fee to them.

I hope the US government doesnt keep cracking down on this.

Nevada and a few other states have no corp state tax.

 

[phracktl]

For companies - among other methods available (income/divs) dont overlook the possibility of paying yourself in the form of a taking a directors loan from your company (dont confuse with taking a loan from a bank against equity...)

 

[BHopkins]

You should definitely talk to an accountant then come to an agreement about how much you will spend. If your partner wants to stop all marketing to get more income what will you do?

How will you make business decisions that you don't agree about?