Paying Managing Partners of an LLC
by SaraEnvoy, Performer
- Created: August 24, 2009, 1:06 pm
I am opening a retail shop in Baltimore. Its structured as an LLC with two equal-share managing partners (including myself).
My question is regarding paying ourselves. I understand that the LLC is a pass-through entity and is not itself taxed, but our incomes will be. Also, that the LLC is to have its own account kept entirely separate from each partner's private account. No commingling - got it.
I had structured the business plan with monthly dividend draws for each partner regardless of how much profit was made. This is to account for the 'make sure you get paid' philosophy and the given that we will be in the red for the first year. However, is it legal to take dividend draws from your reserves? I read somewhere that managing partners were not allowed to take a salary - is that simply semantics?
I have to make sure we will have income even if we don't immediately pull a profit. In doing so, I do not want to find myself bunking with Bernard Madoff. I figure people do this all the time, so there has to be an answer I am just overlooking. Any help would be greatly appreciated!
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