You simply withdraw money from your LLC's business account to your personal account when needed. This is treated as a distribution of profits rather than wages. The IRS considers this self-employment income for tax purposes.
Tax treatment: In Georgia, owner's draws are subject to federal self-employment tax (15.3%) and Georgia state income tax (up to 5.75%). You'll pay taxes on your entire LLC profit, regardless of how much you actually withdraw during the year.
How to do it
Transfer money from your LLC business account to your personal account
Record the transaction as an owner's draw in your accounting system
Set aside funds for quarterly estimated taxes on the withdrawn amount
2
Guaranteed Payment
The LLC makes fixed payments to members for services rendered, similar to a salary but without payroll tax withholding. These payments are made before calculating remaining profits for distribution. The LLC can deduct guaranteed payments as a business expense.
Tax treatment: Guaranteed payments are subject to federal self-employment tax (15.3%) and Georgia state income tax. In Georgia, these payments are treated as ordinary income taxed at rates up to 5.75%, and you must make quarterly estimated tax payments.
How to do it
Document guaranteed payment amounts in your LLC operating agreement
Make regular payments according to the agreed schedule
Issue a Form 1099-NEC to the receiving member and report payments on your tax return
3
Salary via S-Corp Election
Your LLC elects S-Corporation tax treatment with the IRS, allowing member-employees to receive W-2 wages plus additional distributions. Only the salary portion is subject to payroll taxes. This requires running payroll and can provide significant tax savings for profitable LLCs.
Tax treatment: In Georgia, your W-2 salary is subject to payroll taxes (15.3% combined) and Georgia state income tax withholding. Distributions above your salary are only subject to Georgia income tax (up to 5.75%) but not self-employment tax, creating potential savings.
How to do it
File Form 2553 with the IRS to elect S-Corporation tax treatment
Set up payroll to pay yourself a reasonable salary with proper tax withholding
Take additional profits as distributions that avoid self-employment tax
Georgia Tax Notes for LLC Owners
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Income Tax
Georgia imposes a state income tax on LLC member income with rates ranging from 1% to 5.75%. All LLC profits pass through to members' personal tax returns, regardless of the payment method chosen.
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Self-Employment Tax
Georgia LLC members must pay federal self-employment tax (15.3%) on their share of LLC profits when taking owner's draws or guaranteed payments. S-Corp election can reduce this burden by limiting SE tax to salary portions only.
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Estimated Taxes
Georgia LLC members must make quarterly estimated tax payments to both the IRS and Georgia Department of Revenue if they expect to owe $500 or more in state taxes. Payments are due April 15, June 15, September 15, and January 15.
Common Mistakes to Avoid
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Mixing personal and business funds by using business accounts for personal expenses instead of taking formal draws
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Failing to make quarterly estimated tax payments to Georgia and the IRS, resulting in penalties and interest charges
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Not properly documenting owner's draws and guaranteed payments in your accounting records for tax reporting
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Taking excessive draws that leave insufficient cash for business operations or paying yourself too little and missing growth opportunities