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MShore Law
MShore Law, Attorney
Category: Business Law
Satisfied Customers: 25285
Experience:  Drafted Negotiated and/or Reviewed Thousands of Commercial Agreements
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I just formed an LLC between me and my wife. We have a business

Customer Question

I just formed an LLC between me and my wife. We have a business account of course. We also put together an operating agreement and we went ahead and notarized it. In terms of distributing profits, how do we go by doing that? is is as simple as making a bank transfer from our business account to our personal account, or is there something more formal that would be on record? Also, I think that we have to start to send tax payments to state and federal, should we do that quarterly?(our operating agreement states that profit will be distributed quarterly.) We have been a little behind in terms of hiring a CPA who would handle our tax filing at the end of the year but for now we do our own book keeping.

Thanks
Submitted: 3 years ago.
Category: Business Law
Expert:  All Business replied 3 years ago.
Chat Conversation Started
Customer: replied 3 years ago.
Did you answer my question?
Expert:  All Business replied 3 years ago.

i did. i don't know what happened to it.

what i basically stated was that the operating agreement generally determines the percentage of profit and distribution. if it is silent, you would likely do a distribution in amounts that match up with percentage ownership. also, if the 2 of you are the sole members, you can make any changes you want at any time.

as far as taxes, most LLCs are pass-thru entities for tax purposes. that is, they are usually taxed like partnerships where the income flows to the individual level and you and your wife would pay the taxes on your individual returns. you , of course, would need to file a tax return (like a partnership return) and there would be K-1 schedules like a partnership that would be reflective of your individual allocated income. that would then be paid with your taxes. if you expect there to be significant amounts of income, you may want to pay estimated taxes but, as stated, from an individual perspective. keep in mind, if there are employees and payroll taxes due from the entity, that is a different story and would need to be remitted.

with respect to the method of distribution, you can transfer or wire funds in any fashion you desire. you would be advised to keep accurate records of any such transaction and of the income and expenses so that it is clearly marked and you can achieve the benefits of acting through this entity.

 

Expert:  All Business replied 3 years ago.
were you not satisfied with response?
Customer: replied 2 years ago.
ok
Expert:  MShore Law replied 2 years ago.
Thank you for the post, I am happy to assist you by answering your questions. Your other expert appears to have opted out, do you have any follow up questions or additional questions I may answer?

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