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How much to pay yourself

toddharmon

LawnSite Member
Location
Atlanta Ga
Hello everyone,

Im looking to get a bit more organized with my business operations and need some advice. And since forming an LLC recently, I understand it’s important to pay myself wages. I’m just curious as to what you guys pay yourself and/or how did you come up with a specific figure and why. Thanks in advance!
 

AlohaMowing

LawnSite Senior Member
Location
Hilo, HI
Do you have an accountant? Do you have an attorney? Those are the people to ask "how much."

Assuming this is a single member LLC, in general you may draw funds as long as you account for the withdrawals and they do not lead to undercapitalization of the LLC. That means keeping sufficient funds and assets to cover operations and debts of the business.

When making a withdrawal it should never be in the form of a payment directly from the business account to pay for a personal expense, but rather should be a payment to you, which you deposit in your personal account, and then you make the payment from your personal account to pay the bill.

https://www.nolo.com/legal-encyclopedia/personal-liability-piercing-corporate-veil-33006.html
 

jetson

LawnSite Senior Member
As an llc I don’t pay myself anything.. I just file taxes at the end of the year on my 1099 income and typically allowable write offs. If u pay urself a salary. Then you gotta pay taxes on top of taxes.. but that’s just what I do. I spend money on whatever through the year .. if there is 10k in my account and I blow 10k in Vegas. Then I guess I just paid myself 10k to lose . but I’d def get with an accountant.. as already said.
 

prezek

LawnSite Senior Member
Location
Baltimore, MD
As an llc I don’t pay myself anything.. I just file taxes at the end of the year on my 1099 income and typically allowable write offs. If u pay urself a salary. Then you gotta pay taxes on top of taxes.. but that’s just what I do. I spend money on whatever through the year .. if there is 10k in my account and I blow 10k in Vegas. Then I guess I just paid myself 10k to lose . but I’d def get with an accountant.. as already said.
You don’t want to pierce your corporate veil. You set up an LLC for a reason. To protect your personal stuff. As aloha mentioned above, Don’t mix the 2.
 

JFGLN

LawnSite Silver Member
As an llc I don’t pay myself anything.. I just file taxes at the end of the year on my 1099 income and typically allowable write offs. If u pay urself a salary. Then you gotta pay taxes on top of taxes.. but that’s just what I do. I spend money on whatever through the year .. if there is 10k in my account and I blow 10k in Vegas. Then I guess I just paid myself 10k to lose . but I’d def get with an accountant.. as already said.
I like to pay myself a base salary and then a distribution of the profit each quarter.
 
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AlohaMowing

LawnSite Senior Member
Location
Hilo, HI
If u pay urself a salary. Then you gotta pay taxes on top of taxes
Because the IRS considers single member LLCs to be "pass through entities" the LLC income is taxed as personal income the same as income of a sole proprietorship, thus there is no "tax on tax". See https://www.nolo.com/legal-encyclopedia/how-llcs-are-taxed-29675.html. There is an exception to that if the LLC "files Form 8832 and elects to be treated as a corporation." See https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc, but I have never heard of anyone choosing to do that.
 

andersman02

LawnSite Senior Member
Location
Snowy MN
Less then what some of the guys make, much more benefits though, phone, truck, gas health etc
 
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