How To Pay Yourself As A Single Member LLC [2021 Guide]

How do you pay yourself as a single member llc, and yes you have partnerships, multiple members, and more. But this video is all about single members, if you want on other forms let me know and I’ll to work.

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1. How the IRS will Treat your Business
- Because its only you In this business and you have no employees the IRS will tax you as a Sole Proprietorship
- If you had multiple members you would elect to be taxed as a partnership or corporation ( but that’s another video for another day )
- This important because you will get paid differently according to how the irs treats you

Two very important things to Keep in mind:

- First Single Member LLC are disregarded entities, which means you just have to file the income with your taxes and that’s it ( you don’t have to file separate taxes for the business )
- Second Owner Withdrawals: are going to be the way you can pay yourself, by writing yourself a check or transferring your money to your bank account, and your bookkeeper will record it under Owner-Withdraw ( don’t worry won't be taxed twice, because the income is the same, but you have to keep separate for your protections )

For example:
- If I own an LLC and I made $50k last year and withdrew $30,000, I only get taxed once on the 50k total that I made.

Pro Tip:
- Don’t keep more money than needed in the LLC
- Because if you get sued, they can only take the money under the LLC, if you are well protected

2. Taxes on the Money you pay yourself
- Although your owner draw will not be taxed income taxes, they will be taxed on self-employment taxes
- Medicare and Social security tax and that’s around 15.3% ( we call this FICA tax in w2 jobs)
- Now if you ever had a W2 job, where you worked for someone else, you only use to pay 7.65% on this because your employer paid the other half ( but if you are on LLC, you will pay all of it )

Now here Is an Example:
- If you made 50k last year and again distributed around $30,000 to yourself you have to set aside 15.3% for taxes ( $4,590 )
- Plus you’ll get taxed at $50k remember so that’s another around 20% effective tax rate for federal taxes, income taxes and if your in new York local taxes ( so 35.3% is gone to taxes)
- So that’s why you see a lot of people with LLC try to get as deductions as possible and they buy cars, machinery, and so on.

However:
- If your business grows and the plan should be that it will
- Imagine when you're making $100k year 6 figures
- 15.3% of that is $15,300 a lot more

3. The Solution for when you make more money is going to an Scorp
- But this is an only a good idea when you make enough money to justify the extra filing requirements and so on
- But this way your business and you are viewed as different entities
- And you only get taxed on your salary that you pay yourself and not on all the money you paid (self-employed taxes that is )

For example:
- I have to pay myself a reasonable wage
- So if my business net 100k and paid myself 30k
- And withdrew 70k ( I don’t have to self-employed taxes on the 70k)
- But I will pay taxes on the net business income ( and also on my salary)

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

[jonb]

I need look into this. Have six US rental properties, each property is in its own LLC (except the most recent one since it does not yet have a mortgage). Get figure $9, 000/month in total rental income. What I do is I pay each property off of one LLC, so I manually transfer funds from each LLC to one the LLC that account pays off all the mortgages and maintenance of every property. What is left over I then transfer to Schwab to play stocks and / or savings. Since I live in Tokyo, I pay zero US taxes as an American living overseas (Foreign Earned Income Exclusion, FEIE).

Asked my CPA and he said it's was fine, and said I need not change to an S-Corp but the six individual LLCs are fine. However, I need to check again. Really do not understand the nuances of all these, or if there is a better way to transfer funds around.

[RainRedMusic]

Your channel is awesome, man. ✌️ surbscurbed.

[carlosblanquicett]

I get it TOMMY ! You so smart main man.

[armstrongbolton]

Bitcoin is the future  , investing in it now is the wisest thing to do now especially the current rise

[Mika_T_]

Please make that video on the multiple llc

[richardsmalls]

Flawless video bro . Broke it down real clear. And this came at the perfect time because I might just start my own biz

[susieblanco]

Yes im literally doing this... thanks.. needed this

[wandawhite]

Yes every business separate from personal

[jayyvvondon]

Love u bro u taught wat i needed just got my llc todsy

[Msbusinesss]

You're the best! You answered every single question I've been thinking! Thanks 🤗 🤗 🤗

[supcoachcal]

What type of taxes would a indoor sports facility face? Would there be any relation between that and a Single member LLC

[lalo]

Scorp or LLC, if your goal is to make 50k of sales for first year ..of business,

[brianchrisrogers]

This is perfect, thank you! And please yes do create a video on being a multi-member LLC✅

[efrainanaya]

Definitely needs a 2nd video for a multi member LLC. I get it!

[Backtobassics]

Make the multiple member LLC video, it’ll be very useful

[eczema-psoriasiswarrior]

Just started my LLC (6 months) and I’m the only one, how long should I wait to transfer to S Corp?

[garybennett]

So how would I go about infusing money into an LLC? My worry is that if I put one of my rental properties into an LLC and it needs a new roof before it's account has built up enough reserve to pay for it, how could I give the LLC some of my money to have the work done and keep myself separate from the LLC?

[billgens]

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