LLC - Best way to pay “the man”… and myself

LLC - Best way to pay “the man”… and myself

Jordan N HansenPro Member
Rental Property Investor · Des Moines, IA · Member since 2019 · 4 posts · 4 votes

Hello BP,

I am currently in the process of transferring my first multi-family property into an LLC. As with any first in this world, it's an intimidating process, and I have two questions before I dip my toes any further. I'm currently active duty military, stationed overseas in Japan while beginning this journey, so all of my relationships have been built virtually, or from previous connections. Here are my major concerns/questions below:

1) HIRE CPA: Despite this being my first property (in the process of purchasing a second), is it recommended to utilize a CPA. I have also explored the possibility of subscribing to a virtual CPA platform. My biggest weakness as

An investor is most definitely in the tax/legal aspect, and I believe while being overseas an online entity could increase the possibility of further developing my knowledge on the topic through FaceTime/Skype style interactions. Any other insight on this is greatly appreciated.

2) PAYING MY COMPANY AND MYSELF: I'm extremely ignorant as to how I can put myself on the payroll once the home is setup in the LLC. I've done my googling and research, but it's still clear as mud. The goal being continued growth and additional properties, I am lost as to how I can add additional capital into my LLC as well as may myself when necessary. Are there any books/links/tutors/billboards/YouTube videos you lovely humans have to offer on this topic?

Thank you,

Jordan Hansen

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  • Cameron TopePro Member
    Property Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
    5y

    Hey Jordan,

    I wouldn't overthink this. If you feel more comfortable with a CPA then hire a CPA that focuses on real estate. 

    As far as paying yourself, again I wouldn't overthink this. You can setup your LLC as a pass-through entity which doesn't require a separate tax return so the income and expenses from the LLC go straight on your personal return. Rental income is not subject to self-employment taxes so you'll pay just ordinary income taxes on the net income.

    Note: I'm not an attorney or a CPA. 

    Best of luck!

  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · Sarasota, FL · Member since 2017 · 5k+ posts · 3k+ votes
    5y

    There is no payment from LLC as payroll. You just take out the money from the LLC and book it as distribution to the owner. You don't get taxed when you take out the money as you pay taxes on the net income when earned.

    These are simple but get confusing for most people. You don't need to spend hours and hours learning all these. Just find a CPA to work with. 

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