How Do I Pay Myself From My Small Business Bank Account?
By
Know It All
I own a Single Member LLC and have a business bank account through which all business income and expenses should go. As a SMLLC, can I simply cash out (pay myself) from the bank account whenever I want to? I know I pay taxes as a pass-through entity. Does this mean I can withdraw money from the account whenever, or do I need to pay myself a salary?
3 Comments
October 17th, 2009 at 11:21 am
Unless you take a draw you defeat part of the purpose of having established an LLC, which is personal liability. Also, if you just take cash out whenever you want to you loose track of your expenses. Pay yourself a salary.
October 17th, 2009 at 11:29 am
With an LLC you can take a draw or you can take a paycheck.
An LLC can either be looked at as a Corp or a Sole Proprietorship depending on how you pay yourself.
If you take a draw in an LLC the IRS will look at you as a sole proprietorship and if you get sued they can come at you personally.
If you take a paycheck, you have set yourself apart from the company and have the LLC to stand behind in case of a law suit.
October 17th, 2009 at 11:54 am
I would think that you need to set a salary for yourself and that way you can justify the cost of running your company. In this case you are paying someone (you) for the time and effort invested in to the company. Also keep in mind your health insurance and dental as company costs. Consult with your tax preparer or accountant to make sure that you get the most benefits. Good luck!