How to pay myself

Question

My dad and I are going to be purchasing a rental property soon under the LLC which he owns. What would be the best way for him to distribute my income to me. I want to be legal and also take advantages of the tax benefits if able. I've heard of possibly having him pay me dividends which can be tax deductible for him/ tax free income for me. Looking for ideas. Thanks!

Basit Siddiqi · Answer

Joshua EllisSorry to say but what you wrote was very confusing and it looks like you need a professional to walk you through the process.1) LLC's do not pay Dividends.Owners can take a distribution from the LLC. 2) Multi-member LLC's normally are considered partnership for tax purposes.You would normally be allocated a share of the income / expenses based on the writings of the partnership agreement. However, it is unclear whether you are a partner/member as you mentioned the LLC is owned by your dad.Best of luck

Joshua Ellis · Answer

CPA it is! Definitely don't want to get audited or anything of that nature.

Thank you all for your comments

Chris Seveney · Answer

@Joshua Ellis

LLC doesn’t pay dividends it gets rolled up into your personal - if you are a member of the LLC you will get a k-1 which you accountant will probably charge you an extra few hundred bucks a year to do your taxes. Dividend rates are for shares in A stock company

Curtis Porter · Answer

I’d talk with a CPA and come up with a plan. Lots of variables

Ran Iarovich · Answer

Find a cpa!

David M. · Answer

@Joshua Ellis

of course, consult a qualified professional...

You really should form another LLC with the two of you as members...  Another way is to purchase it without a LLC --- you don't need one for for tax/accounting benefits.  Also, it eliminates the extra costs (for one, lending) and administrative overhead.  Just quick thoughts.  You two really need to set yourselves up right.

Be happy to chat.  Good luck.

Brooklyn McCarty · Answer

Talk to your cpa!

Bruce Woodruff · Answer

He'll have to either 10999 you or you work for the LLC and take wages. I don't see a non-taxable way to do this...unless you get extra shares of the company as payment and they might be worth more later? But these are not like stock shares, they are private offers....

John Underwood · Answer

If you make money uncle Sam will want his share.

He might be able to 1099 you? Your CPA should advise you here.

How to pay myself

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