How you pay yourself, by tax status
| Your LLC | How you get paid | How it’s taxed | Payroll? |
|---|---|---|---|
| Single-member LLC (default) | Owner’s draw — transfer money from the business account to your personal account | You pay income tax + 15.3% self-employment tax on all net profit, whether or not you draw it | No |
| Multi-member LLC (default) | Draws and/or guaranteed payments set in the operating agreement | Each member taxed on their share of profit (K-1) + self-employment tax | No |
| LLC taxed as S corp | Reasonable salary through payroll + distributions | Payroll tax on salary only; distributions free of self-employment tax | Yes |
| LLC taxed as C corp | Salary through payroll; dividends | Salary taxed as wages; dividends taxed after corporate tax | Yes |
General information from IRS publications, not tax advice. Your situation may differ — confirm with a CPA or enrolled agent before you act. Verified October 18, 2026. We may earn a commission if you sign up through our links, at no cost to you. How we’re funded.
Owner’s draw (default LLCs)
- Keep all business income in the LLC’s business bank account.
- Transfer what you need to your personal account and label it “owner’s draw” in your books.
- Leave enough in the business for expenses and taxes.
A draw isn’t a business expense and doesn’t reduce taxable profit. You owe self-employment tax (15.3% on 92.35% of net earnings, with the Social Security part capped at $184,500 for 2026) plus income tax on the profit.
Salary plus distributions (S corp)
Once your LLC elects S corp status, you become an employee of your company. You must pay yourself reasonable compensation through payroll — the IRS can reclassify distributions as wages if salary is too low — and you can take remaining profit as distributions without payroll or self-employment tax. LLC vs S corp explained.
Setting aside taxes
Nothing is withheld from owner draws, so plan for quarterly estimated taxes if you expect to owe $1,000 or more. You generally avoid the underpayment penalty by paying 90% of this year’s tax or 100% of last year’s. Due dates: April 15, June 15, September 15 and January 15. All LLC tax deadlines.
Tools that make it easier
Gusto
From $49/mo + $6/person
- Solo plan built for paying yourself a reasonable salary as an S corp
- Unlimited payrolls with automatic tax filings
- Contractor payments and 1099s
Watch out: Per-person fee adds up with larger teams
Found
$0/mo (Plus $35, Pro $80)
- Automatic tax set-aside and tax estimates
- Free invoicing and 1099-NEC e-filing
- Cash deposits at 79,000+ retail locations
Watch out: Requires an SSN — not for non-US founders
Relay
$0/mo (Grow $30, Scale $120)
- $0 Starter plan with no minimum balance
- Up to 20 checking accounts on Starter (Profit First friendly)
- Cash deposits at Allpoint+ ATMs and Green Dot retailers
Watch out: Wire and same-day ACH fees on Starter
Frequently asked questions
How do I pay myself from a single-member LLC?
Take an owner’s draw: transfer money from the LLC’s business account to your personal account and record it as a draw. Draws aren’t a deductible expense and aren’t taxed when taken — you’re taxed on the LLC’s net profit on Schedule C, whether or not you withdraw it.
Can I pay myself a salary from my LLC?
Not as a default single- or multi-member LLC — owners of those aren’t employees. To pay yourself a W-2 salary, the LLC elects S corp (or C corp) tax status and runs payroll.
How much should I pay myself?
As a default LLC, take what the business can spare after setting aside taxes (many owners reserve a share of every payment for quarterly estimates). As an S corp, the IRS requires a reasonable salary for the work you do before distributions.
Do I pay taxes on owner draws?
Not on the draw itself. You pay tax on the LLC’s profit. Because no tax is withheld from draws, you usually make quarterly estimated payments (April 15, June 15, September 15, January 15).
Is an S corp better for paying myself?
Often, once profit is high enough. You pay 15.3% payroll tax on the salary but not on distributions. In our example, an LLC with $100,000 profit and a $50,000 salary saves several thousand dollars a year in self-employment/payroll tax. Run your numbers.
Your LLC setup checklist
- Get a free EINFrom the IRS, in minutes online.
- Open a business bank accountKeep LLC money apart from yours to protect the liability shield.
- Sign an operating agreementSettle who owns and decides what before it matters.
- Get business insuranceCover what the LLC itself doesn’t protect.
- Plan your taxesKnow your tax status and federal due dates.
- Track state deadlinesFree reminders before each filing.
Everything in one list: printable LLC compliance checklist · live deadline calendar.