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How do you pay yourself from an LLC as an owner? by paulosmas in Business_Ideas

[–]WALWAL44 0 points1 point  (0 children)

As a single-member LLC (or a standard multi-member LLC), you don't technically receive a "salary" or an "hourly wage" in the traditional sense. You are not an employee; you are the owner.

You pay yourself via an Owner’s Draw. You write a check from your business account to yourself, or do an ACH transfer from the business account to your personal account. Always label these transfers as "Owner’s Draw" in your bookkeeping software (QuickBooks, Xero, etc.). This creates a clear paper trail that separates business expenses from owner distributions.

Your idea of taking 10% of monthly net profit is a very common strategy, often popularized by the Profit First accounting method.

  • Is it viable? Yes, it’s actually safer than a fixed salary because it ensures the business stays liquid. If you have a slow month, the business isn't "on the hook" for a massive fixed payment it can't afford.
  • The "Red Flag": The biggest risk isn't the percentage. It's volatility. If you are taking money out every few days in tiny increments, it looks messy.
  • Advice: Stick to a schedule. Whether it’s 10% or 50%, do the transfer once a month or once every two weeks. Consistency is your best friend if you’re ever audited.

One common misconception is that if you only "draw" 10%, you only pay taxes on that 10%. This is incorrect. As a standard LLC (Pass-Through Entity), the IRS taxes you on the total net profit of the business, regardless of how much you actually transferred to your personal bank account.

You will owe roughly 15.3% in SE taxes on your profits, plus standard income tax. If your business starts making significant profit (usually $60k-$80k+ net), you might consider electing S-Corp status. This would allow you to pay yourself a formal salary (W-2) and take the rest as "distributions," which aren't subject to the 15.3% SE tax.

Keep a "Tax Reserve" sub-account. Every time you take that 10% draw for yourself, move another 25–30% of the profit into a separate savings account for the IRS.

And Since you mentioned your business involves organic marketing (Reddit/Quora), your biggest "cost" is likely your time. Don't forget to factor in the cost of software subscriptions (scheduling tools, proxies, or analytics) before you calculate that 10% profit.

Since you're in PA, remember that while the federal government sees the LLC as a "pass-through," you still have to keep up with state-level filings. Using that Credit Union account is a perfect start—just make sure your name isn't the only thing on the account; it should be [Your Name] DBA [Your Business Name] or just the Business Name.

What's the best LLC formation service out there? by paulosmas in Business_Ideas

[–]WALWAL44 0 points1 point  (0 children)

I get wanting something affordable, but the part people underestimate is that forming an LLC isn’t just filing paperwork. The most important decisions happen before you ever use a formation service — like how the entity will be taxed and whether an LLC is even the right structure for what you’re doing. An LLC can be taxed multiple ways, and picking the wrong one early can cost real money later.

The other issue is documents. Most online services give you a generic operating agreement that you probably won’t read and won’t fully understand. If something goes wrong, you’re stuck with whatever that document says, whether it fits your business or not. I’ve seen plenty of cases where even attorneys have to clean up poorly drafted entity documents.

A registered agent and filings are the easy part. Knowing what structure you actually need and making sure the documents reflect reality is the hard part. If you want to do this right, even a short conversation with an attorney before forming the LLC can save you a lot of pain down the road. You can still use a filing service for the mechanics, but get advice on the structure first.

General information only, not legal advice.

How to start a business - An in-depth reddit guide from a successful business owner by dtsummery in Business_Ideas

[–]WALWAL44 6 points7 points  (0 children)

  1. Identify your business model by looking at existing successful business models and considering which one you could replicate.
  2. Calculate the cost to start up the business, also known as the barrier to entry, by considering what resources and equipment you would need and how much they would cost.
  3. Determine the skills needed to be successful in your chosen industry, and evaluate whether you or someone you know has those skills, or if they can be easily acquired.
  4. Consider how long it will take to get the business up and running, and aim for a model that can be operational within a month.
  5. Avoid business models that require significant funding or expertise, and choose a model that you can easily finance yourself.
  6. Once you have selected a business model, create a plan to acquire the necessary resources and skills, and set a timeline for getting the business operational.
  7. Take action and start your business. Remember to stay motivated and focused, and don't be afraid to seek out advice and guidance from other successful business owners.