No, in most cases you cannot pay yourself a salary from your LLC unless it is taxed as a corporation. However, you can still take owner’s draws or distributions from the business.
Many side business owners wonder whether they can pay themselves a “salary” from their LLC while also working full-time for someone else. The short answer depends on how your LLC is taxed. Most LLCs are taxed as sole proprietorships (single-member) or partnerships (multi-member), and in these cases, owners do not receive salaries. Instead, they withdraw profits through something called an “owner’s draw.”
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Understanding How LLC Owners Get Paid
LLC owners are not considered employees of the business by default. If your LLC is taxed as a sole proprietorship or partnership:
- You do not get a W-2 or salary from your LLC
- You take money out of the business as a draw or distribution
- You pay self-employment taxes on your share of the profit, even if you don’t withdraw all of it
This payment method is flexible, but it’s different from the structured payroll process used by traditional employers. It also means your LLC must generate profits before you can realistically pay yourself.
What About LLCs Taxed as Corporations?
The only way to truly pay yourself a salary from your LLC is if the LLC elects to be taxed as an S corporation or C corporation. In that case:
- You become an employee of the business and receive a W-2
- The LLC must withhold income taxes, Social Security, and Medicare from your paycheck
- You are required to pay yourself a “reasonable salary” if you are actively working in the business
This structure can reduce your self-employment tax burden, but it also introduces complexity, including payroll systems and corporate tax filings. It’s typically only recommended once your business is consistently profitable.
Paying Yourself While Also Employed Full-Time
If you’re working full-time and running a side LLC, your ability to take income depends on two factors:
- Is your LLC making enough money to cover business expenses and still have profit?
- Have you chosen a tax classification that allows for payroll (if you want a true salary)?
If your LLC is small and taxed as a sole proprietorship, you can take owner’s draws as needed. You’ll pay taxes on the total profit at year-end, regardless of how much you withdraw. If your LLC is taxed as an S corp and you are working in the business, you must pay yourself a salary via W-2 payroll-even if you also have a full-time job elsewhere.
How to Take Money From a Standard LLC
If you are using the default tax treatment for your LLC (sole prop or partnership), here’s how you take income from your business:
- Write yourself a check from the business account or transfer funds electronically
- Record the transaction as an owner’s draw in your accounting software
- Use the funds however you wish-they are considered personal income
Just remember, draws are not tax-deductible business expenses. They come out of after-tax profits. You’ll still pay self-employment tax on your share of the income.
What to Avoid
There are some mistakes side business owners make when trying to pay themselves from an LLC:
- Using personal accounts: Always pay yourself from the business account to keep finances separate
- Calling a draw a salary: This may lead to confusion or tax errors-only S corp or C corp owners can receive an actual salary
- Withholding payroll taxes without setup: You should not attempt payroll deductions unless you’ve formally established an S corp or C corp and set up a payroll system
You can take income from your LLC while working a full-time job, but it won’t be a traditional salary unless your LLC is taxed as a corporation. Most single-member LLC owners simply take owner’s draws. If you want to be on your own company’s payroll, speak with a tax professional about whether electing S corp status makes sense based on your business income. Either way, your side business can generate real income for you-just be sure to do it correctly to stay compliant and avoid tax issues.
