NASE Blogs

LLC Payments

Nov 06, 2009
Q: I formed an LLC and need to know how much it can pay for my mortgage, electricity, and other personal expenses. I would rather the LLC write a check for these rather than pay me a salary.

A: It is a bad business practice to pay any of your personal bills out of your LLC business account. Even by doing so, you will still have to declare those amounts as income.

No matter how the LLC distributes money to you (such as paying your personal expenses), it's going to be considered earnings. And the only deductions the business can legitimately take against earnings are for business expenses.

Since you are an LLC filing as a sole proprietorship, you don't pay yourself a salary. The money your take out of the business account and deposit into your personal account is considered an owner's draw, not a salary. Your net personal income is the business gross revenue minus all expenses.

I suggest you talk to the certified public accountants at TaxTalk or your own tax professional about the tax responsibilities of your LLC.