EP 108 - What Happens When You Take Money Out Of Your LLC The Mark Perlberg CPA podcast

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EP 108 - What Happens When You Take Money Out of Your LLC

2d ago 19:14

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Entrepreneurs often hesitate to withdraw money from their LLCs due to tax concerns, but in most cases, there are no additional tax implications when taking out profits. The tax treatment of withdrawals depends entirely on how your LLC is classified for tax purposes - as a disregarded entity, partnership, S-corporation, or C-corporation.
• Single-member LLCs (disregarded entities): Taking money out is simply an owner's draw with no tax implications
• Profits are already taxed on your personal return whether you withdraw them or not
• For partnerships: Distributions to partners typically have no additional tax consequences
• Guaranteed partnership payments are taxed as ordinary income and subject to self-employment tax
• S-corporation owners must pay themselves a reasonable salary subject to payroll taxes
• Distributions from S-corps can provide tax advantages but require proper planning
• C-corporations face "double taxation" when paying dividends to owners
• Always transfer money to personal accounts rather than paying personal expenses from LLC accounts
• Maintain proper separation between business and personal finances to protect your liability shield
For more help with tax planning, visit taxplanningchecklist.com for our free mini-course or go to prosperalcpa.com/apply for a free strategy session.

Chapters

1. The Common Entrepreneur Dilemma (00:00:00)

2. Understanding Your LLC Type (00:00:49)

3. Single-Member LLC Withdrawals Explained (00:02:09)

4. Partnership Distribution Rules (00:04:10)

5. S-Corporation Money Withdrawal Strategies (00:09:30)

6. C-Corporation Withdrawal Challenges (00:12:59)

7. Final Tips and Resources (00:17:50)

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