how do I access cash from my llc

General Real Estate Investing
1

If I put my properties in the name of an LLC how do I personally get to tap into the profits that my properties bring in every month.

Thnaks in advance

2

uh…write a check?

seriously, distribution of profits has no tax effect. Just write a check and call it “distribution of profits.”

3

How do you pay taxes on what you distributed to yourself?

Signed clueless
sorry for the interuption it was a good question

4

you pay taxes on income when it is earned.

you will pay taxes whether or not you make a distribution.

distribution of cash from profits is a different, and not taxable, event.

5

So to clarify the LLC pays taxes on profit and distribution of cash from profit is not taxed on me personally on my incom tax? I am trying to get information before setting up an LLC. I am mostly interested in rehab .

6

MCWagner is correct. If the company earns $100k in net income, that income is reported on your return from a Form K-1 (very much like a big W-2) whether or not you distribute. Writing a check to yourself from an LLC that is ignored by the IRS, treated as a partnership or treated as an SW-Corporation is almost always a non-taxable event. In the case of the latter two permutations (partnership or S-corp), the aggregate distributions are reported on Form 1065 or 1120S, respectively.

John Hyre

7

Ok lets say I have a LLC taxed as a S-Corp. Throughout the year I take nothing out of the LLC except expences. Then at the end of the year the LLC has made a net profit of 40k. The LLC would then pay taxes on that 40k and inthe same year give a distribution of profit to me for 10k.

  1. Does the LLC send me a form for the D.O.P. for filing my income tax (ie. like a 1099)?

2)If so is there an advantage to doing this compared to getting a salary? (Not knowing whether the LLC will always have the money in the begining to cover said expences incurred w/ a salary?

Sorry it was long winded just trying to make sure i don’t screw myself and not pay attn. to running the inner business while trying to focus on REI.

Thanks

Phil

8

the LLC will send you a K-1 with your share of the LLC profits/losses to report on your tax return.

paying yourself a salary will require withholding, quarterly tax returns, SUTA, FUTA, W-2, W-3 the whole deal.

paying yourself a distribution from profits requires writing a check.

from a hassle perspective, distribution is the way to go. payroll will also cost you more in taxes for FUTA/SUTA that you can avoid otherwise.

So, in your example, taking the distribution is probably best.

Now, if you’re trying to take a reasonable salary to avoid excess SE on non-passive LLC income, that changes the math.

9

Thanks mark for the information.

Your help has been GREATLY APPRICIATED!