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How Do I Pay Myself in a Single-Member LLC? - All Up In Yo' Business

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Learn more about 180 Law Co. LLC by visiting http://180lawco.com. One question that I get asked quite often, because it’s a really good question, is how the owner of a single-member LLC is supposed to pay him/herself. There are two possible answers to this question, depending on how the LLC is taxed. Unless the LLC elects otherwise, a single-member LLC is considered a “disregarded entity” and all of the income to the LLC is treated as income to the business owner, and is all subject to self-employment tax. So basically, the owner of a single-member LLC can pay himself however and whenever he wants, keeping in mind a few important considerations: 1. Make sure you are prepared to pay taxes. Since the LLC is a disregarded entity, if the business earns $100k but you only “pay” yourself $50k, you are still going to be responsible for paying all of the taxes, including self-employment taxes, on the full $100k. (For simplicity’s sake, I am pretending there are no deductions or anything.) So you need to set aside enough money to make sure you can cover your taxes. 2. The business has to remain adequately capitalized. This means that you need to keep enough money in the business to cover all your overhead, debts, bills, salary for employees, etc. You should also leave some extra “padding” for possibly building up your business, purchasing equipment, and whatever else you may decide to do with your business. In the books, any payments to yourself should be recorded as “Member Distribution” or “Member Withdrawal.” If the LLC elects to be taxed as an S Corporation, on the other hand, you have to be paid a “reasonable” salary. Self-employment taxes will only be paid on that salary rather than on the full amount of profit the business earns. Any money that the business owner takes above that reasonable salary is considered a dividend and won’t be subject to self-employment taxes. To learn more about S Corporations, watch my earlier video What the Heck is an S Corporation at http://youtu.be/i5to7Da3wMw?list=UUNh7tqEn68tf0oOfq4NsFsg If your LLC is not taxed as an S Corp, you don’t need to put yourself on payroll, since those member distributions aren’t treated as normal payroll. If your LLC is taxed as an S Corp, then the salary you earn can be part of your payroll, and any additional dividends will be separate from that. Whether or not you elect to have your LLC taxed as an S Corp and how to handle and record the money that you pay yourself is an important conversation that should be had with your accountant, bookkeeper, & attorney. Doing it the “right” way can help minimize your tax liability and can make your life (and that of your accountant) much easier come tax time. Contact Aiden and learn more at www.180lawco.com. [email protected] | 720-379-3425 Thumbs up & subscribe if you want more AUIYB! Follow Me! IG: @allupinyobusiness Twitter: @_AllUpInYoBiz www.facebook.com/180lawco www.google.com/+aidenkramerlawAUIYB www.pinterest.com/AUIYB The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by 180 Law Co. LLC, with its principal office located at 50 S. Steele Street, Suite 250, Denver, CO 80209. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship 180 Law Co. LLC or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice. All Up In Yo’ Business® is a registered trademark of 180 Law Co. LLC. ©180 Law Co. LLC. All rights reserved.
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Text Comments (650)
Patrick Luy (9 days ago)
Okay. I’ll worry about A corp status later then.
isykitty (10 days ago)
That was so good. You are so cute and smart! Thanks girl
QuiteDecent (12 days ago)
Good job
Free Thinker (12 days ago)
Great video !! Do you have a video explaining the pros and cons of each of those llc formats ?
jahnimoody (12 days ago)
I just died at these “graphics” 😂😂😂😂😂
E W (14 days ago)
Great Presentation. Questions. LLC not subject to LLC. When funds a drawn from Equity, does the LLC have to provide a 1099 to owner? That is owner now pays double FICA, and also gets a deduction for health insurance, etc. If LLC is subject to S Corp. rules. does the owner getting the 'dividends' also receives a Int/Dividend 1099? I also understand that a single owner LLC can withdraw from the LLC the funds he/she originally invested in the company without any tax consequences. That, if I invested 50,000.00 in the business and now the business has enough funds to cover overhead, etc and more, the owner LLC can withdraw the $50,000.00 without any tax consequences (yes/no)
John Emerson (15 days ago)
You Go Girl! I Love It
ITM95 (19 days ago)
You have an INCREDIBLE way of explaining things... Thank you so much for sharing your knowledge and helping me. I learned more from this video than I have all the other videos I’ve watched.
180 Law Co. LLC (17 days ago)
That’s amazing. So glad to hear that!! Thanks so much for watching!
j gee (22 days ago)
You're beautiful and smart.. A double win💕
Anthony Roy (23 days ago)
If you are in a 22% personal TB and elect for an S Corp tax structure, your dividends are taxed at the long term capital gains rate which would make your total tax burden lower? Right ( let’s hold payments equal; 50k in PI and 50k in dividends )
poor2richtv (1 month ago)
You are funny as hell I like your personality great information
Marlon Alva (1 month ago)
Clearly Understood!!! Special thanks for the graphic desings! 😂👏🏻👏🏻👍🏻
Kudas Joyce (1 month ago)
Great information Thanks. I’m a car hauler. And next year is going to be my first year in business. I think about doing a S Corp for next year. I think I’m going to profit about $ 250k. Don’t want pay taxes on that 😂
Pedro Hernández (1 month ago)
Hi Aiden, I hope you're doing well... I have a question for you concerning to haw do you report the spends you have to make to run the Bussines and if there are legal deductions or exclusions that help with de taxable income insuring you are going to pay only the reasonable and more just taxes?
King Nice (1 month ago)
You are the best!!! Thanks
Mar Du (1 month ago)
lol precious
Really this channel doing great job
Bigg Puph (1 month ago)
Those are some amazing graphics! I hope you can write that expense off on your taxes.
Panther Platform (1 month ago)
Do us all a favor: don't name your kid aiden or madison. Way overrated...
Thanks for clarifying this.
Jeremy Montel (1 month ago)
Is it the same with 2 member LLC?
Nahun Flores (1 month ago)
Good video, thanks for simplifying it to the point!
City Slicker85 (1 month ago)
Digital Gold LLC (1 month ago)
Thank you for your video Aiden!! from Susan
Customer Service (1 month ago)
Hi Aiden!! Thank you for the Video!!
Y. Voghn (1 month ago)
When do a business decide to S Corp or not? Is that at tax time or at the register your business as an llc
180 Law Co. LLC (1 month ago)
Both! You can make the S Corp election within 2 1/2 months after the LLC is registered, or 2 1/2 months from the beginning of each year. There's no specific rule or timeframe of when you should decide to be taxed as an S Corp--it's always best to talk it over with a tax professional to determine when it's best for your business.
Frank Verde (1 month ago)
Simply Genius!
erika hudson (2 months ago)
When she was talking about the graphics.. Internally I was saying.."oh please let it be stick figures" that was just awesome.. made my day
Krishel Francis (2 months ago)
Very comprehensive. I'm buying a truck under my LLC next yr. B/c I'll be with a large trucking co, my income is guaranteed. S Corp is definitely the way for me. Thank u.
Gregory Delaurentis (2 months ago)
Informational and funny as hell. Thank you so much.
gray pierre (2 months ago)
How to go about building business credit?
Jae Christ (2 months ago)
Thank you so much. Every accountant I try to contact about this says "oh I will take care of that for you" then tells me their yearly service price -_-
SEDRICK WELLS (2 months ago)
Awesome video I started my company back in April of this year and I've watched several videos on this subject and I think uours is one of the best straight to the point informative video by far. I'm subscribed and cant wait for more of your content
Es T (2 months ago)
the problem with the s corp is, it will not increase your potential social security income. I rather pay higher taxes and have a bigger social security income increasing FICA
wil wyse (2 months ago)
Hi, I should want to know, if I will need to still pay taxes on the member distribution from the single member LLC.
vacationboyvideos (2 months ago)
Can I do this to protect me from any future of creditors suing me? I also don't want them to put a lien on my home...can I put my home under a LLC? Also if I fund my LLC with money I received from inhertance...after that money is in my LLC account...is it protected from personal Dept coelctors/being sued for personal Dept. One more question...IF I am sued for my personal credit fraud ( I max out credit card and don't pay it) is my LLC funds protected?
Anthony Jacob (2 months ago)
THANK YOU!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! So informative. You should do my LLC taxes.
Derrick Barnes (2 months ago)
I love how she set up the graphics to be so grand and spectacular and then just brought out stick figures 😂😂😂😂 hilarious
Michael Tab! (2 months ago)
Gezz i wish you were my sister i would love to pick your brain... i have a million questions....do you have an email i could send you questions once and a while?
Rumpa Stiltskin (2 months ago)
How does this work with the new Administration's revised tax law?
top gun (2 months ago)
Great info , how is your business doing ? What type of business are you doing?
Woodley camille (2 months ago)
😂😂😂😂....that's cute..
Ed Jones (2 months ago)
Lol, great sense of humor. Are you open for hire? I'm an LLC and I want to make sure I'm all correct, while Google is good, it isn't Attorney good.
Saudi Mike (2 months ago)
I hope you will be taking a tax deduction off the money you spent on those expensively, well done graphics. :). Nice video.. thank you for putting it together
Dave White (3 months ago)
How long can I leave money I haven’t paid myself in the s-Corp?
exclusivelynyc (3 months ago)
Great video
LiveNaturallyLove (3 months ago)
Alexander Ammons (3 months ago)
So I only have to pay taxes on the money I take out of the LLC for my personal income?
180 Law Co. LLC (3 months ago)
No, the exact opposite. It's all taxed even if you don't pay yourself a dime.
S R (3 months ago)
6:00 you said you didnt make enough to justify treated like a s Corp my question is what is the minimum salary you reccomend before electing to be taxed as a s Corp
S Campbell (3 months ago)
Great video.  Very informative & straight to the point.  Thanks...
relative9696 (3 months ago)
Great but you never said what percentage to take out for taxes per month
Jerry A (3 months ago)
DaPush (3 months ago)
your personality is awesome. great job explaining that. I looking forward on watching ur other videos.
Vic James (3 months ago)
Dont believe this shit the LLC is the lest of your problems. It will cost you thousnads after and if you can servive that you better have thousands more for the next wave that Hits you
matt borges (3 months ago)
Your cute, can I hold you like a baby?😌
john baker (3 months ago)
Wow, amazing graphics and wine in the same video! Brilliant. and LMAO.
Sarah C (3 months ago)
Do you pay taxes quarterly so you don’t get hit with a penalty when you file your taxes at the end Of the year?
Make Nitro Great Again (3 months ago)
She "takes half" 🏃‍♂️
AHZ 011 (3 months ago)
Joaquin Zuniga (3 months ago)
Very informative. And you're very beautiful 😍
David Carter (3 months ago)
Perfect as usual.
Laylo Koka-kola-klassixs (3 months ago)
You sexy af fr
Perry E. Tucker (3 months ago)
Very informative.....fun learning. 😊
JODY PATRICK (3 months ago)
Can I withdraw cash from an ATM ? single member llc no s corp.
Nikhil Ghelani (3 months ago)
great info. but hate her vocal fry... almost stopped video in first 10sec but checked comment and thought it will be worth watching.
Brian Willess (3 months ago)
did you know h3ck is a euphemism for h3ll and you used the word as profanity?
Angel Avi (3 months ago)
I subscribe just because I need to learn from you ♥️
jmidesigns (3 months ago)
I’m in California and this state charges yearly yet in Nevada I hear their is no charge for LLC. Is this true? Awesome information and videos thank you.
Musa I of Mali (3 months ago)
Miranda?...is that you?
Drukpa Kunley (3 months ago)
My ooo my ...you must of Spend 6 figures (Amount of Money ) on the company you hire to do your Expensive.. Graphics Designs.... lol.... still laughing...
Drukpa Kunley (3 months ago)
You Are A crazy lady... ...
Drukpa Kunley (3 months ago)
Drukpa Kunley (3 months ago)
Penelope Tate (4 months ago)
Do you have videos of a small business who only has a DBA and pays taxes as an IC? It's service based so it varies every year...
Kelly Hill (4 months ago)
You are beautiful and have a great personality.
Antwoyne Gray (4 months ago)
Dope! Plain english with a lot of information👌🏾
Royal Biz (4 months ago)
Beautiful Graphics and Great info. Thanks.
Edwin Thomas (4 months ago)
I just subscribed because you break it down so easily & you have a sense of humour.
My god, thank god for you. This has been an issue for me. I'm an s corp. I cut myself a check once a month. Is that cool?
180 Law Co. LLC (4 months ago)
Sure, as long as you are paying yourself enough to be considered a "reasonable" salary. (That's something you should confirm with your accountant/CPA.) But taking one paycheck a month is totally cool.
Truth Speaks Group (4 months ago)
Great video!
Lost & Lux (4 months ago)
Very informative!
ADEBISI ADEBISI (4 months ago)
Show us them tits
Almaretta Jordan (4 months ago)
I loved this video ! 🙏🏾 thank you 😊
jams4041 (4 months ago)
"Wine" LOL
meme youyou (4 months ago)
excellent video. just want i needed! thanks!
Lee Anne (4 months ago)
A very practical explanation; I appreciate it!
wardogs161 (4 months ago)
Great video from a gorgeous woman.
Frank Santilli (4 months ago)
So when do you elect if you want to be taxed as a S corp or not? Tax time??
Stewart Moore (4 months ago)
Thank you very much for the help
astrology A (4 months ago)
Thanks for the great vidoe. Really helpful. Two questions: 1) is Member Distribution part of the LLC's expenses, which means we don't pay tax on it because we pay tax based on net profit after all expenses? 2) I'm a lil confused on whether we should allocate taxes (both income tax from net profit and self-employment tax) amount from the 50% we pay ourselves or the other 50%? Thank you.
astrology A (4 months ago)
Thank you for replying. 3 out of 5 YouTubers, in my own experiences, don't reply. So a big thank you to you! If you don't mind, I have another concern: I came across this article yesterday https://www.entrepreneur.com/article/191790 and the author was able to articulate on a subject of my concern: protection on LLC owner's privacy. "Despite occasional abuse, Nevada's privacy protections do offer value to the legitimate and law-abiding businessperson. Probably the single greatest benefit of Nevada's privacy protections is that it serves to protect business owners from unscrupulous creditors, aggressive attorneys and frivolous litigation. The real victory is not to ever be sued. Experienced businesspersons and lawyers know this. Nevada's privacy protections can go a long way in achieving this goal by effectively hiding business owners from public view and thereby protecting them from litigation." NV's law does protect LLC owner's identity but unfortunately not its officers and managers. And on their article of Organization, owner is required to list initial manager on the form. And as a single member LLC owner, that means our name has to be on the form, which then become public record. NV even require owners to file an Annual List of officers, where all officers names and information are required, which then also become public record. I have talked to an attorney here in California about this issue but he doesn't really appreciate and recognize my concren on this because his years' of practices did not justify this concern and it's highly unlikely unless you're a celebrity of some sort. I don't want to get racial, but he's a middle-aged caucasian male attorney in an affluent neighborhood so most of his clients probably also fall under that same econimic umbrella. I, on the other hand, is a person of multiple minority background and being discredited for what I said (that's if I event get to talk) and what I do is a regular scene in my everyday life. And to put my small business, which is a website in a very competitive online industry, and a project I've been working on for a very long time with all my heart and soul, under an extra unnecessary layer of risk by exposing my identity on LLC documents is a notion that simply betrays my common sense and conscience. Especially all this can be all avoided by just not showing my name from the get go. Now after learning the fact that single member LLC's corporate veil is relatively more susceptible to being penetrated (thanks to your another well-done video) , ID protection has become an even bigger concern to me. I've been debating setting up my LLC among Seattle (lower state tax), Las Vegas (no state tax) and Denver (located in the healthiest state). After watching several of your videos, I'm wondering how is Colorado LLC law in terms of protecting single member LLC owner's privacy, especially when the owner doesn't want to hire an outside manager to manage the business? Thank you and sorry for the long reply. Have a great weekend!
180 Law Co. LLC (4 months ago)
Great question! No, the member distribution is NOT a deductible expense. That's why the IRS taxes all of the profit regardless of whether you've paid it to yourself or not. However, if the LLC is taxed as an S Corp, the reasonable salary portion is a deductible payroll expense (since the payroll taxes are taken out of the salary).
Learning Everyday (4 months ago)
Hilarious! And SMART!!! You're Hired!
Kymosh Myrick (4 months ago)
How much should be allocated to the taxes??
Rick Reynoso (4 months ago)
As an S corp, do you have to pay yourself via payroll every month or can you do one 940 and 941 at the end of the year? As for the dividend is that part of payroll? Or can you do member draws outside of payroll and call it a dividend at the end of the year?
Striker744 (4 months ago)
Awesome video. Clear, concise and precise to the point. Thanks for doing this.
YouTube Everything (4 months ago)
Can a s-corp sell real estate using owner financing now that the DOD Frank legislation is in play ? thank you
Diego García R. (5 months ago)
It’s mandatory to pay myself?!
Glenn Frederick (5 months ago)
I'm a VISUAL LEARNER, and I think you are one brilliant VISUAL TEACHER! 'couldn't thank you enough! haha
Scilence (5 months ago)
The graphic design really helped me to understand better😩😂😂 A+
Cynthia Ant (5 months ago)
making it simple. that's great.
Conor Gordon (5 months ago)
So after watching this I was fearful I would have to pay SE tax if I did an LLC for my rental property but I just read that rental properties even when actively managed are considered passive income and not subject to SE tax. Can you please confirm his? Thanks

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