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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 (596)
Derrick Barnes (13 hours 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! (1 day 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 days ago)
How does this work with the new Administration's revised tax law?
top gun (3 days ago)
Great info , how is your business doing ? What type of business are you doing?
Woodley camille (3 days ago)
😂😂😂😂....that's cute..
Ed Jones (5 days 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 (10 days 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 (12 days ago)
How long can I leave money I haven’t paid myself in the s-Corp?
exclusivelynyc (14 days ago)
Great video
LiveNaturallyLove (14 days ago)
Alexander Ammons (18 days 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 (15 days ago)
No, the exact opposite. It's all taxed even if you don't pay yourself a dime.
S R (18 days 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 (18 days ago)
Great video.  Very informative & straight to the point.  Thanks...
relative9696 (20 days ago)
Great but you never said what percentage to take out for taxes per month
Jerry A (22 days ago)
DaPush (23 days ago)
your personality is awesome. great job explaining that. I looking forward on watching ur other videos.
Vic James (24 days 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 (26 days ago)
Your cute, can I hold you like a baby?😌
john baker (26 days ago)
Wow, amazing graphics and wine in the same video! Brilliant. and LMAO.
Sarah C (27 days 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 (28 days ago)
She "takes half" 🏃‍♂️
AHZ 011 (29 days ago)
Joaquin Zuniga (1 month ago)
Very informative. And you're very beautiful 😍
David Carter (1 month ago)
Perfect as usual.
You sexy af fr
Tucker The Trucker (1 month ago)
Very informative.....fun learning. 😊
JODY PATRICK (1 month ago)
Can I withdraw cash from an ATM ? single member llc no s corp.
Nikhil Ghelani (1 month 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 (1 month ago)
did you know h3ck is a euphemism for h3ll and you used the word as profanity?
Angel Avi (1 month ago)
I subscribe just because I need to learn from you ♥️
jmidesigns (1 month 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 (1 month ago)
Miranda?...is that you?
Drukpa Kunley (1 month 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 (1 month ago)
You Are A crazy lady... ...
Drukpa Kunley (1 month ago)
Drukpa Kunley (1 month ago)
Penelope Tate (1 month 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 (1 month ago)
You are beautiful and have a great personality.
Antwoyne Gray (1 month ago)
Dope! Plain english with a lot of information👌🏾
Royal Biz (1 month ago)
Beautiful Graphics and Great info. Thanks.
Edwin Thomas (1 month 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 (1 month 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 (1 month ago)
Great video!
Lost & Lux (1 month ago)
Very informative!
ADEBISI ADEBISI (1 month ago)
Show us them tits
Almaretta Jordan (1 month ago)
I loved this video ! 🙏🏾 thank you 😊
jams4041 (1 month ago)
"Wine" LOL
meme youyou (1 month ago)
excellent video. just want i needed! thanks!
Lee Anne (1 month ago)
A very practical explanation; I appreciate it!
wardogs161 (1 month ago)
Great video from a gorgeous woman.
Frank Santilli (1 month ago)
So when do you elect if you want to be taxed as a S corp or not? Tax time??
Stewart Moore (1 month ago)
Thank you very much for the help
astrology A (2 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 (2 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 (2 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 (2 months ago)
Hilarious! And SMART!!! You're Hired!
Kymosh Myrick (2 months ago)
How much should be allocated to the taxes??
Rick Reynoso (2 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 (2 months ago)
Awesome video. Clear, concise and precise to the point. Thanks for doing this.
YouTube Everything (2 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. (2 months ago)
It’s mandatory to pay myself?!
Glenn Frederick (2 months ago)
I'm a VISUAL LEARNER, and I think you are one brilliant VISUAL TEACHER! 'couldn't thank you enough! haha
Scilence (2 months ago)
The graphic design really helped me to understand better😩😂😂 A+
Cynthia Ant (2 months ago)
making it simple. that's great.
Conor Gordon (2 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
Pat Andersen (2 months ago)
I subscribed, thanks for making and posting this video.
Roland Beckles-Lamazon (2 months ago)
the best video on the topic. Question im a bit confuse as to when people say take money from your llc account and some goes to payroll, some to saving account some put aside for taxes and some for your investment account. are these actually accounts in the bank attached to your llc or these are accounts on your business books which does not exist in the bank?
180 Law Co. LLC (2 months ago)
Great question! It could be either way, really. Some people use bank accounts to actually separate everything out, some just do it on a spreadsheet. It's really up to you and what works best for you.
Geo Cyo (2 months ago)
The graphics! 😂😂😂 Great video, though.
Sheena Matos (2 months ago)
I really needed this! Thanks so much
Maria Espinoza (2 months ago)
How about a LLC that owns a s Corp?
180 Law Co. LLC (2 months ago)
An LLC can't be a shareholder/owner of an S Corp.
IDGAF (2 months ago)
Isn't the SE tax based on Revenues - Expenses? You almost make it sound like the 15.3% is based on revenues alone...Scary lol
Michael L (3 months ago)
Thank you
Jeff Hughes (3 months ago)
Does the distribution get hit with the double corp tax?
180 Law Co. LLC (3 months ago)
Nope, all of the income is taxed just once at the personal level. No corporate tax unless the entity is taxed as a C-Corp.
Champs-U (3 months ago)
Fantastic graphic and explanation :) and what a lovely lady! This video give me exactly the info I'm looking for, thanks a lot!
Joshua Espinoza (3 months ago)
Kristian James (3 months ago)
Love the humor! Thank you for breaking this down 💗
Terrance T (3 months ago)
If your llc is not taxed as an s-corp can you change it to be taxed as one.. and how do you go about doing so?
Serenity Farm (3 months ago)
Wow! Great videos. Just discovered the channel and the way you explain legalize ( is that a word:), makes it very easy to retain! Your sense of humor is wonderful and your graphics "dept" is top notch:) I believe wine may be assisting them:)
Cheryl Stonestreet (3 months ago)
Wish I had known this when I set up my LLC. Thanks!
scott hochhauser (3 months ago)
What if you dont have an llc and you need a salary every 2 weeks, do you double the takes for the amount that is taken?
High Altitude Investing (3 months ago)
Seriously love you content :) and personality thank you for sharing
Roxy Monazahian (3 months ago)
Do you have any videos on how to pay employees? My boyfriend is the owner of the LLC and I am an employee of the company and I am trying to figure out how to pay myself
Jason O. Nungesser (3 months ago)
I always imagined, should I ever start a YT channel, I'd have 'state of the art' graphics as well, so when you pulled out the graphics I was pleasantly surprised. I'll have to watch the SCorp v LLC video because they still confuse me.
idontfeelsogood (3 months ago)
You're hot.
Mark Fagan (3 months ago)
I like this thanks
Mo (3 months ago)
I about died when I saw the graphics. Your hilarious!
me too (3 months ago)
So at what point should you switch over to an S-corp?
Julie Grimes (3 months ago)
what can be paid from a dividend? Can that money be used to buy a house, boat, car ect?
180 Law Co. LLC (3 months ago)
Once the money is paid to you, you can buy whatever the heck you want with it.
Eugene Smiley (3 months ago)
VeryPoliticalHonkey (3 months ago)
Video starts at 1:38
Josh Myers (3 months ago)
Thank you for the example and WOW amaing graphics! ...is it possible for my Single Member LLC S-Corp to cover some expenses as a 'perk' of ownership in the company so long as the company is and remains adequately capitalized? Examples; company car, company insurance, ..etc. (you get the picture).
Carlos Ulloa (3 months ago)
this is the best.
Purpose Creates Impact (4 months ago)
Awesome tips for my llc.
FrostScience (4 months ago)
Brilliant! Thank you.
Henry Valencia (4 months ago)
You had me with the graphics. Lol
Lodus Beats (4 months ago)
So Helpful! Thank you from a fellow Coloradoan!
Dan Kelly (4 months ago)
Can you elect S-corp treatment after being in business several years?
Afrocentric AnatomyTV (4 months ago)
Great info
Gerardo Cuellar (4 months ago)
New to your channel...WOW..you have taught me alot.. Keep up the great videos..
edu njeri (4 months ago)
Got questions 1.how much money do you need to make to be an s Corp 2.so if you made a million do they tax you on the million or after you minus expenses and dividends 3. Did you say you can be a single member on s Corp and pay yourself dividend
Jack Frick (4 months ago)
Thanks for not creating “death by PowerPoint.”
180 Law Co. LLC (4 months ago)
My PowerPoint skills are 👎
Nobiaz Customs Inc (4 months ago)
do ppl in other countries have to go thru all these shenanigans? lol I just wanna make money man sheesh lol

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