How Do I Pay Myself From My LLC? │ Single & Multi-Member Guide

Published by Jon Morgan | Co-Founder & Chief Editor

Last updated: April 21, 2026

Methodology
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I've spent over 9 years as a business consultant helping LLC owners figure out the best way to pay themselves — and this question comes up more than almost any other.

This guide covers every scenario, so you know exactly what to do and what to avoid.

Quick Summary

How to Pay Yourself Through Your LLC?

LLCs protect your personal assets from business debts and liabilities. That's the core reason most founders choose this structure in the first place.

Here's the thing about LLC taxation: it doesn't work like a traditional corporation. The LLC itself pays no income tax at the business level. Instead, profits pass through to the owners, who report and pay taxes on their share each year — whether they pull the money out or not.

That pass-through structure gives you the same liability protection as a sole proprietorship or partnership, but with cleaner personal asset separation.

An LLC can choose to be taxed like an S-corporation. This means that you will pay taxes on your personal income tax returns instead of filing another tax return for the LLC.

When you pay yourself from an LLC, it is important to remember that all distributions of the company's profits and losses must be reported.

The salary members get will depend on the type of the LLC, their ownership percentage, and how it is taxed as self-employment income.

How to Pay Yourself Through Single-Member LLCs?

A single-member LLC has one owner — called a "member" — and it's by far the most common LLC type in the US. More than half of all small businesses are structured this way, including most solo operators who run things without employees or partners.

Paying yourself through a single-member LLC works in two ways:

• You take an owner's draw, pulling money directly from the business like a sole proprietor would.
• Or you elect S corp taxation and pay yourself a salary plus distributions.

Distributions aren't treated as taxable income for single-member LLC owners until they hit certain IRS thresholds, which get adjusted upward each year [1].

Once your LLC is generating enough profit, S corp taxation can save you real money on self-employment taxes. But for most single-member LLCs — especially early-stage ones — the default pass-through setup is the right call.

How to Pay Yourself Through a Sole Proprietorship (Default)?

By default, a single-member LLC is taxed exactly like a sole proprietorship. You report business income on your personal return using Schedule C, then pay self-employment tax on net profit via Form SE.

The LLC itself doesn't owe income tax. It's a legal entity created by state law — not a taxable one at the federal level.

So how do you actually pay yourself? You write yourself a check. Single-member LLC owners take distributions whenever they want — there's no payroll process, no W-2, no approval required. Just move the money from your business account to your personal one.

That said, those distributions are still subject to self-employment tax, just like the LLC's net income is. The LLC doesn't get taxed — you do. That's pass-through taxation in a nutshell.

One thing I've seen trip up a lot of first-time founders: don't pull out more than what's passed through as net income. Doing that can trigger double taxation and, worse, poke a hole in your corporate veil.

How to Pay Yourself Through an S Corporation (Elected Status)?

S corp status isn't a business structure — it's a tax election. Your LLC can stay an LLC legally while choosing to be taxed like an S corporation by filing the right form with the IRS (see difference between an LLC and an S corporation).

When you make that election, profits pass through each member's personal income taxes instead of running through a corporate tax structure. In my experience, this makes the most sense for LLC members who want to pay themselves a salary but don't want to pay self-employment taxes on every dollar of profit.

Here's how it works: your salary gets reported on your personal tax return as your pro-rata share of S corp income, taxed at your individual rate. FICA taxes — federal payroll taxes — are withheld automatically from each paycheck. Remaining profits can be taken as distributions, which aren't subject to self-employment tax. That's where the savings come from.

An S corp election is ideal for those businesses that can generate enough profits to cover their salary and an additional amount for the company.

This method is not ideal if members take such large distributions that there isn't enough left over to pay themselves a reasonable salary.

How to Pay Yourself Through a C Corporation (Elected Status)?

A C corporation differs from an S corp in that it is taxed as a separate entity and its owners (known as shareholders) are subject to double taxation.

Shareholders must pay taxes on any dividends distributed, or they can elect for the corporation to retain earnings in the company, which will be taxed later when those funds are distributed as dividends.

C corps report their wages from a W-2 on their personal tax return. FICA contributions will be deducted immediately from the pay.

That means that a C corporation must pay corporate taxes on its net earnings and that the dividends paid to shareholders are included in their personal income taxes.

To put it another way: Dividends from C corporations are taxed twice - once by the corporation as part of its profits at a rate equal to your marginal tax bracket plus the additional Medicare surtax on investment income.

"It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for."

- Jon Morgan, CEO, Co-Founder & Editor-in-Chief of Venture Smarter

How to Pay Yourself Through Multi-member LLCs?

A multi-member LLC has two or more owners. By default, it's taxed as a partnership — the business files a return, but taxes on net profit are paid by each member individually at their personal income rate.

Each member needs to decide how they want to be compensated. Most take both a salary and distributions, since each has different tax consequences. Before any of that happens, though, the ownership percentages and profit-sharing terms need to be locked down in your operating agreement. Don't skip that step.

Multi-member LLC owners pay income tax on their draw and self-employment taxes on top of that — same pass-through structure as a single-member LLC, just split across multiple people.

This setup works well for businesses where multiple people are actively involved in operations.

Multi-Member LLC Taxed as a Corporation

Multi-member LLCs can also elect to be taxed as an S or C corporation — and the tradeoffs are worth understanding before you choose.

With S corp taxation, owners pay income taxes and FICA contributions on their reasonable salaries. The potential tax savings need to be weighed against the added cost of payroll processing and accounting to maintain that status.

With C corp taxation, members pay both FICA and income taxes on their compensation. Dividends are only subject to income tax — not self-employment tax. But unlike S corps, the C corporation itself is taxed on total business profits before anything flows to the owners. That's the double-taxation issue you'll hear about.

An S corp election is ideal for those businesses that can generate enough profits to cover their salary and an additional amount for the company.

This method is not ideal if members take such large distributions that there isn't enough left over to pay themselves a reasonable salary.

Paying Yourself through a C Corporation (Elected Status)

A C corporation differs from an S corp in that it is taxed as a separate entity and its owners (known as shareholders) are subject to double taxation.

LLC shareholders must pay taxes on any dividends distributed, or they can elect for the corporation to retain earnings in the company, which will be taxed later when those funds are distributed as dividends.

C corps report their wages from a W-2 on their personal tax return. FICA contributions will be deducted immediately from the pay.

That means that a C corporation must pay corporate taxes on its net earnings and that the dividends paid to shareholders are included in their personal income taxes.

To put it another way: Dividends from C corporations are taxed twice - once by the corporation as part of its profits at a rate equal to your marginal tax bracket plus the additional Medicare surtax on investment income.

Drawing from my experience, a C corporation is ideal for those businesses that want to attract investors or want to be traded on the stock market because the investors can receive dividends and capital gains.

How to Handle Taxes When Paying Yourself From an LLC

When you pay yourself from an LLC, nobody withholds taxes on your behalf. You're on your own — which means you owe the IRS directly, four times a year, through estimated quarterly tax payments.

Those payments are due in April, June, September, and January. If you expect to owe $1,000 or more for the year, you're generally required to make them.

I always tell my clients: don't skip these or guess at the amounts. Missing a payment — or underpaying — triggers IRS penalties even if you end up with a refund at year-end. Use IRS Form 1040-ES to calculate what you owe each quarter based on your projected income and expenses. It's not complicated once you do it once.

Related Articles:

• Do LLCs Have Shares
• What Are LLC Guaranteed Payments
• How Can an Owner Withdraw Cash From an LLC

FAQs

References:

1. https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-companies