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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I make around 180K per year and my wife makes around 80K per

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I make around 180K per year and my wife makes around 80K per year. I am investing in a LLC which may generate profits? How should I plan to draw profits form LLC to make sure my tax obligations are not heavily increased? I want to specify this in the LLC operating agreement.

Megan C :

Thank you for your question, and thanks for using JustAnswer.com

Megan C :

The draws of your profits do not determine your taxable income with respect to the LLC - the profit of the LLC determines that

Megan C :

You could theoretically have tax and receive no distribution

Customer:

So if I reinvest the profit in the business, still I am liable for tax for the profit ?

Megan C :

Yes, that is correct.

Megan C :

Even if profits are reinvested in the business, they still create taxable income to the owners of the LLC

Customer:

So anything I should take care of at this point while we are drafting the Operating agreement?

Megan C :

It's pretty standard, actually. There's nothing from a tax perspective that you could optimize in the operating agreement

Customer:

Ok, thank you.

Megan C :

You're welcome

Megan C :

Is there anything else I can assist you with today?

Megan C and other Finance Specialists are ready to help you
Thanks Priyesh for your positive rating. Please come back and visit me any time you have a tax, finance, or social security question that needs answered. It was a pleasure working with you today.
Customer: replied 2 years ago.

Thanks.

You're welcome.

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