Drawing money out for personal things
Hi all!
I have a few rentals at the moment all under my LLC. Everything is humming along nicely, and the extra cash is going straight into the commercial bank account I have set up for each property every month.
We've all talked about growing, making it big, etc, but what happens tax/legal wise when you withdraw that cash and buy something for yourself personally?
For example, let's say I own 50 properties and I'm pulling in $15k per month net. Can I use that cash to say go buy a car, pay my personal mortgage, etc?
Ultimately, my goal is to have around $40-$60k per month net, and retire (about 10 years from now according to my calculations.) I'd like to upgrade my primary residence to a much bigger place outside of the city. There's no way I'd be able to afford it on my salary alone, so was curious what you all thought?
Thanks in advance!
As a LLC you are allowed to either make a draw and/or a distribution. A draw is basically payment for your services rendered within the company since according to LLC Rules you cannot be an employee if you are a member. A draw is basically synonymous for "salary". A draw is also tax-deductible for the LLC. Since a LLC is a Flow-through entity, you can wait year-end and have your portion flow through to your Personal tax returns and cut yourself a check then. For the best results it is best to consult a Tax Accountant or your CPA, for a more qualified recommendation. Best of Luck!
Originally posted by @Patrick Noel:
As a LLC you are allowed to either make a draw and/or a distribution. A draw is basically payment for your services rendered within the company since according to LLC Rules you cannot be an employee if you are a member. A draw is basically synonymous for "salary". A draw is also tax-deductible for the LLC. Since a LLC is a Flow-through entity, you can wait year-end and have your portion flow through to your Personal tax returns and cut yourself a check then. For the best results it is best to consult a Tax Accountant or your CPA, for a more qualified recommendation. Best of Luck!
Ah ok perfect! I plan on talking to my CPA about this as well. I was just curious if I could have the LLC pay my future mortgage or pick up a shiny new Tesla. :)
