How to Pay Yourself from an LLC

From owner's draws to guaranteed payments and salaries, here's how LLC owners pay themselves and the tax implications of each method.

How you pay yourself from an LLC depends on how the LLC is taxed and whether you have one owner or several. The method you choose affects your self-employment tax, your quarterly estimated payments, and how much you keep at the end of the year.

The short answer: most LLC owners take owner's draws from company profits, which are not subject to payroll tax. If your LLC elected S corp status, you must pay yourself a reasonable salary with payroll withholding. Multi-member LLCs may also use guaranteed payments.

Owner's draws: the default for LLCs

An owner's draw is money you transfer from the LLC to yourself out of the company's profits. There is no payroll, no withholding, and no minimum or maximum — you simply take the money when the business can afford it. Draws are not deductible by the LLC and are not wages.

Because draws are not taxed at the moment you take them, you owe income tax and self-employment tax on the LLC's profits through your personal return, whether or not you actually withdraw the cash. Plan for quarterly estimated payments.

Guaranteed payments for active members

In a multi-member LLC taxed as a partnership, a member who provides services to the business can receive a guaranteed payment. Unlike a draw, a guaranteed payment is treated as a business expense, and it is paid regardless of whether the LLC made a profit.

Guaranteed payments are subject to self-employment tax, and they are reported on the member's Schedule K-1. They work well when members contribute different amounts of work and want predictable compensation.

Salary if your LLC elected S corp status

If your LLC is taxed as an S corporation, you must pay yourself a reasonable salary for the work you perform, and the LLC must run payroll with tax withholding. The remaining profit can be distributed to you as a shareholder, and those distributions are not subject to self-employment tax.

This is the main reason owners elect S corp status: it can reduce self-employment taxes. The IRS requires the salary to be reasonable for your role, so you cannot set it artificially low. See whether an LLC can be an S corp for the full trade-off.

Tax implications of each method

Owner's draws and guaranteed payments are taxed as ordinary income and subject to self-employment tax at the rate of 15.3 percent on net earnings up to the Social Security wage base (as of 2026, check current IRS limits). S corp salaries are subject to payroll tax withholding, but distributions avoid self-employment tax.

Whichever method you use, the LLC's profits are attributed to you for tax purposes each year. If you have questions about your specific situation, consult a tax professional.

How to choose the right method

For most single-member LLCs, owner's draws are the simplest approach. Multi-member LLCs often combine draws with guaranteed payments. If your LLC produces enough taxable profit, an S corp election can reduce self-employment taxes across the board.

Track every transfer between you and the LLC, and keep that record for tax time. For the forms and deadlines, see how to file taxes for your LLC.

Quarterly estimated taxes and recordkeeping

Because no tax is withheld from draws or guaranteed payments, the IRS expects you to pay estimated tax quarterly. The due dates are roughly April 15, June 15, September 15, and January 15, and underpaying can trigger interest and penalties even if you settle up at filing time.

Keep a written record of every transfer between the LLC and your personal accounts, and note whether each one is a draw, a loan, or a repayment. Clean records make tax preparation faster and give your accountant the information needed to classify each payment correctly.

Frequently Asked Questions

How do I pay myself from a single-member LLC?

Take an owner's draw by transferring money from the business account to your personal account. There is no payroll or withholding, but you pay income tax and self-employment tax on the LLC's profits through your personal return. Plan for quarterly estimated tax payments.

Can I take a salary from my LLC?

Only if your LLC is taxed as an S corporation. In a default LLC, owners take draws or distributions instead of salaries. S corp owners must pay themselves a reasonable salary with payroll withholding, then may take additional profit as distributions.

Do LLC owners pay self-employment tax?

Yes. In a default LLC, your share of profits is subject to self-employment tax at 15.3 percent on earnings up to the Social Security wage base. S corp distributions avoid self-employment tax, which is why some owners elect that status.

What is a guaranteed payment in an LLC?

A guaranteed payment is money an LLC pays a member for services, regardless of whether the company made a profit. It is deductible by the LLC and subject to self-employment tax for the member. It is common in partnerships and multi-member LLCs.