What do you do with a tax refund due to your LLC?

Question

This year, I did LLC taxes for the first time (we formed in 2012). I used TurboTax and did it wrong. I was/am on a steep learning curve and did not even know that we members had to claim any profits on our personal taxes (even if we didn't actually take that money out of the LLC).

Anyway, I just had a CPA amend our taxes and my partner and I are each getting a refund.

What do you guys do when you get refunds? Do you keep it for yourselves or is it a better choice to put that money back into the LLC since that refund is because of LLC finances?

Dave Toelkes · Answer

In your position, I would deposit the refund to my personal checking account. My refund may not be the same amount as my partner's. Should the LLC need a capital contribution, my partner and I would each contribute an equal amount.

Nicole A. · Answer

Thanks, Deborah, for your take. So you're saying definitely put that refund back into the LLC.

Any other experiences/opinions?

Deborah Burian · Answer

@Nicole Williamson - in my personal priority order...

1) supplement LLC emergency fund if needed

2) Use toward any planned upgrades

3) Pay down debt

That's where we are now. A year ago, I'd have used it toward the next purchase unless the emergency fund was empty.

What do you do with a tax refund due to your LLC?

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