#1 Consult a tax professional. For self employeed folks you can find someone trust worthy for less than $250 who can help and will probably save you way more than that in the end. #2 Most commonly you don't really pay yourself as an LLC, you combine the taxes of the LLC and your own personal taxes. This could vary greatly depending on the structure of your LLC and quite a few other factors. #3 It's definitely wise to keep your finances seperate so cutting yourself a check at regular intervals is probably a good idea.   But seriously, find a local tax pro they'll know what the best options are specific to your state and situation.

I'd check out the wiki page mate en.wikipedia.org/wiki/Limited_liability_company ---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.

I have an LLC, and the money is a pass-through. In a way the LLC makes no profit, it all goes to you. You need to pay yourself enough so that the irs believes you are a professional. Otherwise, they can pierce the corporate veil. Best to seek professional serivce. An accountant (and an attorney) are the best investments in your business, time, sanity, and security that you can make.

Talk to your tax professional about having your LLC treated and taxed as an S-Corp. This is excellent for one-member LLCs. You can save a lot on self employment tax via dividend payments. However, you must pay yourself a reasonable salary as required by the IRS. Traditionally, a LLC is pass through entity, so all profitloss is passed onto the member(s). Unless you opt to have your LLC treated as a C-Corp or S-Corp corporation. Remember, you WILL get double taxation that.

Hi Rems, Check out our blog, Paying the Boss: 4 Tips for Setting Your Own Salary. You can also learn more about the pros and cons of LLC and combining the benefits of an LLC with S-Corp in our LLC Guide.

the best way to pay yourself is the way which avoids the most tax! if the tax on your businesses profits would be more than your persoanl income tax, pay yourself and pay personal income tax or vice versa.

This is an excellent blog Christine. Thanks for sharing it here. Excellent Guide - thanks for putting this together. I've trying to decide whether to setup my 2 person LLC to be taxed like a partnership or corporation and depending on that answer, whether to pay a salary or just take money out as dividends, etc. The info above helped point me in a direction that I think I'll take (LLC as partnership).

Eric - Thanks for the feedback! We're glad you found this blog helpful. Feel free to check out our other articles in Expert Insight and News.

An LLC is a pass-through entity that provides its owner the protection of a corporation while avoiding the double taxation of income. Whatever the net results of the fiscal year, the profit or loss passes on to the owner who in turn can claim an income (in the case of a profit) or a loss or reduction of income (in the case of a loss). In the first case, the owner's taxable income is higher, however in the second case the owner receive a tax benefit/advantage. Now, since an LLC is a pass-through business entity, the owner does not get paid a salary. He or she can withdraw money for his/her own usage, thereby reducing his/her investment in the business. For accounting purpose, the owner will have a draw account in the books where each draw will be posted. The draws are not taxable, since they reduce investment. Only the net profit that is passed on the owner can be taxed along with the owner'sother earned incomes within his/her own tax bracket. I hope this answer your question.