💰 How to Pay Yourself with an LLC
- Oct 7
- 3 min read
🪞 Real Talk: You Deserve to Be Paid Like a CEO
Starting your LLC was the first big move. But let’s be honest—many new business owners skip one crucial step: paying themselves properly.
Paying yourself isn’t just about moving money around. It’s about financial structure, tax strategy, and credibility—all of which help you get closer to funding-ready status.
So, whether you’re just starting or cleaning up your business finances, this guide will show you how to pay yourself the right way and why it matters.
🔍 Step 1: Know How Your LLC Is Taxed
An LLC can be taxed in two main ways:
1️⃣ Single-Member or Multi-Member LLC (Default)You’ll take what’s called an owner’s draw, which means you transfer money from your business account to your personal one. It’s not a paycheck—it’s a withdrawal from your profits.
2️⃣ S-Corporation Election Once you start making consistent profits, you can elect to be taxed as an S-Corp. This lets you pay yourself a reasonable salary through payroll, then take the rest as distributions, which can save you on self-employment taxes.
📘 Helpful IRS Links:
Limited Liability Company (LLC) Overview
S-Corporation Election Form 2553
💼 Step 2: Separate Business and Personal Finances
If you’re using your personal bank account for business—stop immediately. It’s one of the fastest ways to lose credibility with banks and underwriters.
Setup:
✅ A business bank account
✅ A business debit card or credit card
✅ An accounting system to track every dollar
This structure keeps your books clean, helps with taxes, and makes applying for business credit or funding much smoother.
Recommended Banking & Finance Tools:
Relay Financial – Free Business Banking
Novo Bank
Lili Bank for LLCs
QuickBooks Online
Wave Accounting (Free)
💳 Step 3: Figure Out How Much to Pay Yourself
Don’t pull random numbers from thin air. Be strategic.
Here’s your formula:
Calculate your average monthly revenue (use at least 3 months).
Subtract your business expenses.
Set aside 20–30% for taxes.
What’s left? That’s your owner’s pay range.
If you’re taxed as an S-Corp, use payroll software to stay compliant and avoid IRS issues.
🛠️ Payroll Tools:
Gusto Payroll
Square Payroll
ADP Run
TaxAct for Small Businesses
📈 Step 4: Create a Consistent Pay System
Consistency is key. Set up automatic transfers from your business account to your personal one weekly or biweekly—just like a paycheck.
This helps with:
Budgeting your business and personal life
Building lender trust
Proving financial discipline
Use an app like QuickBooks or Xero to automate this process and generate monthly reports.
📊 Recommended Apps for LLC Owners:
QuickBooks Online
Xero
Wave
FreshBooks
🧾 Step 5: Keep Records of Every Payment
Every owner’s draw or payroll transfer should be documented.
Transfer confirmations
Payroll stubs
Profit & loss statements
Year-end reports
📂 Pro Tip: Use our Clearway Business Tracker Template available inside the (Clearway University Resource Library) to stay organized all year long.
🪙 Bonus: Paying Yourself Builds Business Credit
When lenders or underwriters review your profile, they’re not just checking revenue—they’re looking at structure.
Paying yourself properly shows
Your business is financially organized
You’re serious about long-term growth
You understand how to manage money
That’s the kind of business banks love to fund.
If you want to learn how to structure your LLC and prepare your business for funding, enroll in Structure Your Business Like a Boss
your step-by-step course to setting up a fundable foundation.
🔗 Additional Resources
🎯 Final Thoughts
The way you pay yourself is more than a paycheck—it’s your business heartbeat.
By keeping your finances clean, consistent, and compliant, you’re not just making money… you’re building legacy wealth.
So, take this week to:
Open that business account
Set up your payment structure
Track your finances like a pro
You’ll be amazed at how confident and credible your business starts to feel.
⚡ Ready to Go from Hustle to CEO Pay?
Book your 60-Minute Strategy Session with Coach Tina and get hands-on help structuring your pay, taxes, and funding strategy.
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