How do you pay yourself?

Question

I'm about to finish up with my first flip. I have it in a LLC, after I finish and sell it my accountant suggests I should open either another LLC or land trust to pay myself from. What do you guys do and what are your thoughts?

David M. · Answer

@Gerald Lunetta

Seems a little odd..  If you want to "decapitalize" the LLC, assuming its a single member LLC, you just take what is called an "owner's draw" and transfer the funds from the LLC's bank account to your own bank account.  You would annotate/mark the transaction as such for accounting purposes.  Remember, you aren't taxed on what comes out of the LLC's bank account.  Its a pass-through entity (unless you elected a different tax status).  Your accountant should know this.

Nothing immediately comes to mind about what your accountant is suggesting, but there isn't much information about any additional circumstances.

Good luck.

Wayne Brooks · Answer

From the limited amount of info you gave us, it doesn’t make sense. Whether you have 1 or 101 LLC’s (unless you chose some other specific entity category for taxation) all the income goes to your personal taxes....no matter how much you “pay” yourself.

Wayne Brooks · Answer

From the limited amount of info you gave us, it doesn’t make sense. Whether you have 1 or 101 LLC’s (unless you chose some other specific entity category for taxation) all the income goes to your personal taxes....no matter how much you “pay” yourself.

David M. · Answer

@Gerald Lunetta

For flips, thats common to do one deal per LLC.  Just take the so called owner's draw and move the funds to your personal bank account.  Then, close down the LLC.  The flip income, emphasis on income, is taxed as active/ordinary income anyway.  Again, its pretty straightforward unless you have something else going on. Perhaps you need to speak with some other qualified professionals and get a second opinion.

good luck.

Gerald Lunetta · Answer

@David M. Every flip will be in a different LLC, so not all the properties are under one LLC (rather be safe than sorry). Wasn’t sure how to pay myself that way

How do you pay yourself?

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