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How do owners take money from their account for profit

Customer Question
How do owners take...

How do owners take money from their account for profit shares, legally, without it being considered like tax fraud, embezzling, etc?

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

My company is a small, class B home care agency. We are an LLC. We have two members owning 50% each. We also owe a 3rd investor 20% of profits I wanted to know how we record, in our banking, when the owners are ready to settle their profit shares. Like if we have 2000 in profit, and we should each get 1000. How do we make sure we are legally taking that?

Accountant's Assistant: Is there anything else the Accountant should be aware of?

I am also trying to figure out, when we file business taxes online or with a person, does the company owe taxes, or are those paid when we claim any income on our personal taxes?

Submitted: 6 months ago.Category: Finance
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12/20/2017
Financial Professional: bkb1956, Finance Enthusiast replied 6 months ago
bkb1956
bkb1956, Finance Enthusiast
Category: Finance
Satisfied Customers: 6,357
Experience: IRS Enrolled Agent, 20+ years of experience in tax preparation with associated finance experience.
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Welcome to Just Answer. My name is ***** ***** I will be happy to assist you.

A two-member LLC defaults to a partnership entity unless S corporation or C corporation status is elected.

If a partnership, the partnership files its own tax return (Form 1065), but will not pay taxes. Because a partnership is a pass-through entity, any profit/loss is passed through to each partner via K-1. The information on the K-1 is then entered on each person's personal tax return (1040).

A partner in a partnership also does not get paid a salary. Each partner can take distributions from partnership profits and are taxed based on their share of those profits on their partnership income tax return.

Please let me know if I can assist you further.

Thank you and best regards,

Barb

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