How to Pay Yourself from Your Single Member LLC (Updated for 2021)

[@jimhart]

Thank you for watching! I just announced a new FREE training that reviews the exact 10 Step Process I use for starting an Online Business: www.obfoundations.com/10steps

[@spacerace6847]

I have been binging this channel, thanks for all of the valuable information! I'm about to launch my own business for the first time and everything on this channel is gold!

[@jimhart]

Thanks!

[@fightbackfakenews]

If u don't mind me asking? What type of business?

[@Quantum_Bluntz]

Good luck to you! 😃😊

[@mariogrady6649]

I do have a question, once I write a check from my LLC to pay myself, am I subject to paying the personal taxes from that income as well? Or will it be taken care of when I file taxes for the business? Basically will I have to pay taxes twice since technically it’s personal income. I hope the question isn’t too confusing & thanks in advance!

[@hiimchris]

In for reply if it ever happens.

[@Spyder2002]

I had the same questions and after consulting with my CPA the answer is no if you are a single member LLC. You would file schedule C to your personal 1040 tax return

[@alexpluzington]

@mariogrady6649 did you ever get this question answered?

[@Mini-kp6tc]

By far the easiest person ive heard explaining exactly what i need to know about paying myself out of my LLC! Thanks. Loved the sip of coffee break too! Hahahha so personable! I can all relate to you for sure! Thanks!

[@HopeProphecy]

How would I pay myself in a structure with a single-member holding LLC (S-Corp) that owns my operating LLC, of which I’m the only owner and employee? How can this be done without piercing the corporate veil and losing asset protection, while still seeing the tax benefits of an S-Corp? Which LLC would handle payroll and how would dividends be distributed? Thanks!

[@jimhart]

Why do you need two LLC's if you are the only owner and employee of both?

[@DYLOGaming]

Awesome video my man. When paying myself, you mentioned writing a check. Is issuing an ACH payment okay as well? I'm using Chase for my personal & business account and prefer the speed (and lack of cost) of transferring compared to a check. Thank you in advance!

[@jimhart]

That is correct, but I like to keep my business accounts separate from my personal accounts.

[@billv7931]

Thanks for all the great information. I hope to apply it in the next year.

[@BenWindle-zv6cr]

Thanks for your video! Helping me a ton! **something for you, a heated mug is worth every penny. My favorite is named after the glowing bits of a campfire:)

[@debbiegibson8945]

Im having coffee with you this morning. I want to turn my hobby into a business. Thank you for sharing this valuable information.

[@jimhart]

At first I thought I missed an appointment, but I get it... 😉 You are so welcome!

[@therefinerymedspa]

What qualification should I look for when finding a local LLC lawyer & accountant?

[@markg3305]

All these questions you are answering are the only things stopping me from starting a business! Thank you very much!

[@jimhart]

You are so welcome!

[@jaymesagency]

I'm 4 videos into your channel. Also an NC resident. Thank goodness it's starting to be spring.

[@TanjaTrades]

great tips. def getting the book

[@kaseychambers1775]

I'm so glad I found your channel. I'm in the process of setting up an LLC, I've been looking into it for years now just trying to gather as much information to make sure I mostly understand what I'm getting into and try to make the initial start as smooth as I can. I've learned more from a handful of your videos than I did a in a whole year of personal research. You explain things very well, and you don't bounce from topic to topic endlessly making it easy to follow and understand. Listening to your information is more like talking to a neighbor for advice over a donut and coffee. I was starting to panick after the initial excitement of it all wore off because I had these kinds of simple questions that, to be frank, are a little embarrassing to bring up with anyone. Anyways, thank you so much!

[@redemption5294]

Hey Kasey, how can we start LLC safely with any agency that take care of all of those processes?

[@terrywideman7488]

Not doing an online business, I'm going to be driving my own semi truck, this seems like it will work just as well for me

[@nicolecarson9067]

Great video I commingle all the time I’m a start up . I’m definitely going to switch my business bank account to another bank separate from my personal bank account.

[@AEOutfitters]

Jim your videos are awesome. THANK YOU

[@gvrdesignswithstyleinmind]

Your Dropping Nuggets Here ... Thank you!

[@jimhart]

My pleasure!!

[@caredfor391]

Excellent job explaining the topics you share. Have been practicing most suggestions already - so feeling competent and ready to learn more! Coffee is definitely a business expense - talking shop every Starbucks visit!

[@jimhart]

You got this!

[@dans7485]

Very helpful so far thanks for this video!

[@jimhart]

Glad it was helpful!

[@JB-ee9cy]

Hi! I've watched a few of your videos on how to pay yourself as single member llc. For the past two years, I have just filed my profits on schedule c of the 1040 individual tax. I've been informed that filing S corp will save me on taxes. I have recently filed form 2553. However I do not understand how to pay myself with a reasonable salary or with distrubutions. I've signed up for Quickbooks and unfortunately, I do not understand the process. Do you have a video or is there a way to pay to speak to you for advice? Or do you you recommend an online accountant to walk me through the process?

[@jimhart]

Great question. I don't recommend trying to do it yourself. Use my recommended provider: hawthornlaw.net/payroll (affiliate link) I've been using this company for years and have nothing but good things to say about them.

[@gbce2404]

Greetings, how do I go about splitting bills if I’m using my home as my business office and what percentage to pay towards that?

[@kimberlycoronado1855]

This is a great topic to talk about.

[@jamalmoss5933]

Thank you! I elected to have payroll added to my quickbooks account. Do I really need this function if I pay myself using a check from my business account?

[@Bilfrid]

are start up expenses deductible from your income?

[@chasecarter1170]

Bout to start up my first business , thanks for the broad scope of information you post dude, much appreciated. My main concern right now is what bank to go with for business account and credit, hearing nothing but nasty stuff about a majority of the big banks in the country currently. With so many different ones out there it's a difficult decision to make especially doing it all myself. It's a struggle to say the least.

[@jimhart]

Don't overthink it. Just pick a bank that you have a relationship with.

[@anthonyoc5871]

Does it have to be a physical check or can you just do a bank account transfer? Like zelle

[@deedeewimley]

Literally was looking this up yesterday! Ahh! Thank you!

[@jimhart]

No problem!!

[@same.7939]

Hi Jim, great video, and thanks for all the helpful information! One question. Just to clarify, do you have to profitable to pay yourself from your LLC, or can it be just from revenue in which case your draw is considered fixed cost to a loss-generating business? Thanks again.

[@savannahmiller222]

You are a god send, thank you so much for your informative videos. This has helped me tremendously.

[@adamschmidtcreationsllc3547]

Thank you for the information. I just started my LLC and have been wondering about the topics you discussed. Is quickbooks or a similar program necessary to keep record of business expenses, self payments, etc. or just a spreadsheet will suffice?

[@jimhart]

I personally use QuickBooks.

[@RurouniStarchild]

Okay, just for that Miyagi-Do coffee mug, you, sir, have my attention and my subscription.

[@jimhart]

Welcome aboard!

[@jimhart]

I'm so bummed I left that one in North Carolina in storage... my fav.

[@jessiestracener2408]

I've seen a lot of confusing numbers about what to save for taxes. Why 15%? I've seen as high as 30% set aside recommended so I was just curious about the reasoning

[@bellwethertrucking3650]

If my llc owns a vehicle, can I use said vehicle for personal use (provided I'm only writing off fuel receipts for company use)?

[@stephie1stephbeyond127]

Thank you. I'm so happy that you are generous enough to make these videos.

[@nodozhit]

I'm in Alabama, where there isn't any DBA shortcuts to building the business I want to start. I have a very innovative product idea for a startup but I can't get any business owners to commit to buying my product solution without me showing merit or having my product already in a catalog. What's a good tip for gaining customers or crowdfunding or potential licensees, without being able to establish my business.

[@gregallen1]

Best damn video I’ve seen on this subject. THANK YOU! 🙏🏻

[@jimhart]

Well that's a glowing endorsement! Thank you!

[@Spyder2002]

Hi I do have a question as a single owner LLC for which I provide professional consulting services my client sent me a W-9 form to fill out. Do I use my personal SSN or my LLC’ EIN number ?

[@sntlr87]

Can i start with just three bank accounts. Income, opersting , and tax accounts. And then pay myself from operating account after staring to make some money ?

[@Bertiemang]

What is the best business bank account type to open? Wouldn't we want something that has an API?

[@jimhart]

I recommend this bank - hawthornlaw.net/relay (affiliate)

[@tyoung8032]

If you currently have no income from your business but you have debt on your business credit card for startup cost. To pay the credit card do I need to transfer money from my personal bank account to my business bank account to pay this amount? Or can I pay it directly from my personal bank account?

[@yourfriend4170]

Love your channel 🙌🏻 thank you for useful info and fun! 😆

[@WillJauregui]

Do you have to actually use a check to pay yourself? Can you just do a transfer through your banking apps?

[@TheJoeGizzle]

Hey Jim! I have a question. When you take a distribution from the business, a single member LLC in this case, and deposit it via check into your personal bank account to pay your personal bills and such, does this create a taxable event? Your content has been a great help. Thank you! - Joe

[@alexthompson2574]

Do you need multiple types of accounts for your business, ie checking, savings & money market/investment?

[@MrMountain707]

Great tips! You're awesome man!

[@jimhart]

I appreciate that!

[@Tasso170]

Thank you for such great information I think you’re a wonderful educator

[@audiowithinmusic7274]

Great info!

[@Atknight81]

When you write yourself a check what do you write on the memo of the check? Salary? Owners pay?

[@mickdavid1066]

Do you have this written down anywhere

[@alisontames884]

Did you mean $50K/year in revenue or in profit?

[@davit1]

Any issues doing an external bank transfer instead of writing a check?

[@camdenmetteer3910]

How do I get in contact with your team or someone in general. I used your services and I have a few questions? Who do I get in contact with?

[@abbibi6450]

Ahhh, you should teach, you are so good at this.

[@VanSheGoes]

Very good information

[@BecomingHappy2023]

Can you transfer or zelle you pay to your personal account or does it have to be an actual check?

[@jimhart]

You can do an EFT.

[@siennaawesome6902]

Oh my goodness! Thank you for explaining all this!

[@richardmcgough582]

Could I just do an internal bank transfer instead of using a check and write in the memo of the transaction "distribution" or "contribution" ? Just seem silly to write a check when you can just do a transfer lot easier. What would be the difference between a check and a bank transfer for the eyes of the IRS?

[@jimhart]

No, as I mentioned in another comment - it could be EFT but I recommend keeping business and personal banks separate. Zelle has a limit on the amount that can be transferred, as do some business banks. So checks are just generally easier. But they suck too. Has nothing to do with the IRS.

[@bradleylivingston6514]

is there a difference between a "shareholder contribution" and "start up expenses" for a single member LLC other than simply the timing of the deposit? Is there any advantages or disadvantages to one or the other? are there any tax implications to either of those?

[@mikylaandres8817]

I keep seeing YT videos saying that LLC does not protect you, especially if you do it by yourself you may not cover yourself properly. Do you have any videos elaborating on that?

[@jon8367]

Basically you have to have a business bank account and use that instead of your own bank account. If you don’t they can sue you directly because you didn’t separated your business from yourself completely. That means you will need to deposit all money your business make in the business account and then pay yourself with a check every week or so.

[@metamarcus8834]

With you, thank you for this.

[@heyloveistheway]

Why are you saying dont pay yourself with a business check to your personal account, how else can you do it?

[@jimhart]

I made this video awhile ago, but I don't think that is what I said. I actually think writing a check to yourself from your business to personal account is the way you should do it. I take an owner draw every week and that is still how I do it. (I also take a salary at the end of each month and have payroll taxes/FICA/etc. deducted.)

[@heyloveistheway]

@jimhart thanks Jim I appreciate it! Some of yr videos have been extremely helpful to me and given me information I haven't found in any other yt videos

[@merarirodriguez2127]

I officially started the LLC this year, but unfortunately have done everything wrong already but hope im.within time to fix it all asap. I have definitely co-mingled funds bcz I woukd pay MY PARTNERS personal bills from the business account cause.he wasn't really "taking a pay" for several oaths as a "work into his partnership" which I so regret. Now, we both are taking a.weekly pay and I'm transferring it from biz to personals but what do I do for the pass months i.screwed up?

[@jammiebanks1128]

I'm with you I have a lot of ideas I wanna sell or start up either by partnership or loans

[@missycheng1371]

Do I need a payroll company if I'm just single member LLc?

[@gineenspring855]

Great Topic!

[@RobbyGoodwin]

Is there any reason why you recommend writing a check as opposed to doing an online transfer between personal and business accounts? Thanks

[@ARyan-yk9qh]

Personally, I write a check to have a tangible record trail not only for myself, but for my C.P.A. come tax time when they need my records.

[@AllieJL]

@@ARyan-yk9qh Anymore receipts can be screenshots for your CPA, so why wouldn't the trail in your online banking be good enough? I haven't used a check for anything except my kids school in years.

[@ARyan-yk9qh]

@@AllieJL - I pay for my business expenses through checks (if the merchant doesn't have a way to pay on-line. If they do, then I'll use my business debit card) as this creates a sufficient paper trail not only for myself, but also for my C.P.A. come tax time. Moreover, I do not have the need to write too many checks (usually 1-2 a month) so, it's not a really a hassle.

[@evelyn1480]

Thank you.!

[@tj6639]

im with you

[@mickdavid1066]

With you - helpful

[@amishadowbanned6264]

When you were talking about level 2 at around 5.50 you did not give a time frame for the profit you were discussing. 25k-50k a month or annually?

[@nymode]

It would be annually

[@kentfitzpatrick4179]

I'm with ya

[@themidlifetravelerlexielee9506]

You are a lifesaver!!!

[@jimhart]

Thank you - I'm glad to help!

[@miamusashi1111]

What?! I can't pay business bills using my personal bank account? 😑

[@JR-lo2ei]

With you.

[@staceyforehand9513]

Great info

[@josielancaster7095]

Yes thank you your epic

[@lifewithnickyd]

Thank you so much

[@joshua-the-seer8494]

Thank you

[@modernfoundingfathers]

Thank you 🙏🏼

[@beefing313]

👍🏾

[@jaden5637]

Hello. I am in the works of starting a business. Just watched your old video for the LLC. And me myself and others just starting from scratch are lucky to have you on KZbin. If there's a way I can reach out to you for more advice because I was recommended to talk to a lawyer about this kind of advice. That would be awesome man. I'm wanting start a food truck business and grow from there. I'm currently 24 years old with big plans. 2 others closest to me that I've observed over some time before making the proposal of the idea to them are wanting to chime in.

[@rootsnootthnute8598]

Law!

[@tayyabkolby6477]

Ok

[@sheisdivine3678]

THNK YOU FOR THIS INFO!!

[@asteroverseas1350]

Hi Jim, I am a resident of India, can i start sole proprietorship in USA to check whether my products sell on amazon fba USA before starting LLC. Please advice.

[@projectauto7560]

What about paying our quarterly tax payments? With an LLC should those come from my business bank account or from my personal account since an LLC is a pass through entity? I’ve been paying them from my personal account but if that’s not correct I’d like to do it correctly. Thanks!

[@ARyan-yk9qh]

Personally, I pay it out of my business account because I see it as a business expense. I never pay anything that is business related from my personal account as not only does this prevent co-mingling of funds, it provides you with cleaner records for both your business and personal records. I would suggest paying them via your business account as this is probably the smarter thing to do.

[@TheAdrien001]

Anything in general for the business would be business expense in my opinion.

[@jiaxiong7390]

❤

[@vcdg_collections4751]

Check vs Zelle?

[@jimhart]

I don't like Zelle because there is a daily limit on how much you can transfer, and it is low - like $1,000 or something. You can typically deposit up to $10,000 with a check.

[@vcdg_collections4751]

@@jimhart i guess I must have a higher limit with Zelle. My interest is paperwork wise, do they show up the same come taxes 🤔

[@hjwang4477]

@@vcdg_collections4751 I htink aslong as there is a paper trail, it should be fine

[@fignootin]

Hypothetically speaking what if i will never make more than 50k? i have too many questions lmao

[@jon8367]

Just pay yourself, do your taxes and deduct any expenses, actually it has benefits not to make much money, you will be in a lower bracket in the first years, ideally you will be making lots of money after a few years.

[@leeia5839]

Wonder if you are only 1 who runs business, no employees, business run self , do s corp work or is LLC better and can a business owner start receiving money without a llc?

[@Heinzy44]

You would need to file an LLC, then elect S Corp status when it makes sense for you to revenue wise.

[@leeia5839]

@@Heinzy44 thanks

[@olivemurielle389]

Thank you

[@jimhart]

You're welcome

[@evelyn1480]

Thank you!🙏