Taking out money from LLC Account

5 Replies

Fellow investors.

I own 3 properties right now in my perosnal name. I do have a seperate bank account for those 3 properties (3 properties share one account) that is not linked to my personal account.

  • Question is when I complete the transfer of these properties into the LLC can I take any profits or transfer any money from the business account into my personal account? Is it allowed are there tax impications?
  • Do I need to have a seperate bank account for each property or can I have the 3 properties share one account and just keep good spreadsheets?

I'm sure it hsa to be ok to pay yourself incase you needed some extra money from your own business right?

Thanks

I'm not an accountant (and I don't play one on tv) I have 37 doors all in 1 LLC, all run out of 1 LLC checking account. An LLC is a pass-thru entity where the profits pass thru to my personal tax return. I pay taxes on the profits whether I take any distributions from my account or never take a penny out. Hope that helps.

@Patrick Nuciforo

In general, assuming that you have not elected to be taxed as a corporation, and you are the sole owner of the LLC, the entity is disregarded as an entity separate from you. So, for tax purposes, the entity does not exist and there will be no tax consequences to moving money out of the business account. All of the income of the business will be shown on your personal tax return. However, using the LLC's funds as your own and not keeping adequate books and records is a recipe for allowing someone to "pierce the corporate vail" and attach your personal assets in a lawsuit.

You can have the three properties share an account.  That would be fairly normal.  If you have good accounting/property management software, you can keep track of income and expenses on a per-property basis even if they share a bank account.

This is general information only and is not intended to be legal or tax advice, and you would be well-advised to consult a tax professional and lawyer to discuss your specific situation.

I agree with what Stephen said above.

Just to add more words, ditto the above.

What they mean by "pass through" is that when you put money into your LLC, it is adding owner contributions, which isn't a loss or a gain. When you remove money from your LLC, it is an owner draw, which isn't a loss or a gain. Regardless of what accounts the funds are in, if the LLC makes money it doesn't matter if it stays in the account or moves to yours, it is looked at the same.

Thanks everyone for the replies. I assumed so and just wanted to make sure.

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