How do you pay yourself as a single member llc, and yes you have partnerships, multiple members, and more. But this video is all about single members, if you want on other forms let me know and I’ll to work.

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1. How the IRS will Treat your Business
- Because its only you In this business and you have no employees the IRS will tax you as a Sole Proprietorship
- If you had multiple members you would elect to be taxed as a partnership or corporation ( but that’s another video for another day )
- This important because you will get paid differently according to how the irs treats you

Two very important things to Keep in mind:

- First Single Member LLC are disregarded entities, which means you just have to file the income with your taxes and that’s it ( you don’t have to file separate taxes for the business )
- Second Owner Withdrawals: are going to be the way you can pay yourself, by writing yourself a check or transferring your money to your bank account, and your bookkeeper will record it under Owner-Withdraw ( don’t worry won't be taxed twice, because the income is the same, but you have to keep separate for your protections )

For example:
- If I own an LLC and I made $50k last year and withdrew $30,000, I only get taxed once on the 50k total that I made.

Pro Tip:
- Don’t keep more money than needed in the LLC
- Because if you get sued, they can only take the money under the LLC, if you are well protected

2. Taxes on the Money you pay yourself
- Although your owner draw will not be taxed income taxes, they will be taxed on self-employment taxes
- Medicare and Social security tax and that’s around 15.3% ( we call this FICA tax in w2 jobs)
- Now if you ever had a W2 job, where you worked for someone else, you only use to pay 7.65% on this because your employer paid the other half ( but if you are on LLC, you will pay all of it )

Now here Is an Example:
- If you made 50k last year and again distributed around $30,000 to yourself you have to set aside 15.3% for taxes ( $4,590 )
- Plus you’ll get taxed at $50k remember so that’s another around 20% effective tax rate for federal taxes, income taxes and if your in new York local taxes ( so 35.3% is gone to taxes)
- So that’s why you see a lot of people with LLC try to get as deductions as possible and they buy cars, machinery, and so on.

However:
- If your business grows and the plan should be that it will
- Imagine when you're making $100k year 6 figures
- 15.3% of that is $15,300 a lot more

3. The Solution for when you make more money is going to an Scorp
- But this is an only a good idea when you make enough money to justify the extra filing requirements and so on
- But this way your business and you are viewed as different entities
- And you only get taxed on your salary that you pay yourself and not on all the money you paid (self-employed taxes that is )

For example:
- I have to pay myself a reasonable wage
- So if my business net 100k and paid myself 30k
- And withdrew 70k ( I don’t have to self-employed taxes on the 70k)
- But I will pay taxes on the net business income ( and also on my salary)

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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