You withdraw money from your LLC's business account whenever you need it, without treating it as an employee salary. This is the simplest method where you take distributions of profits or capital from your ownership interest. The amount and timing are entirely up to you as the owner.
Tax treatment: Idaho treats owner's draws as self-employment income subject to federal self-employment tax (15.3%) plus Idaho state income tax (1.125% to 6.925% depending on income level). You'll receive a Schedule K-1 showing your share of LLC profits, which you report on your personal Idaho tax return even if you didn't take any draws.
How to do it
Ensure your LLC has sufficient cash flow and maintain a positive capital account balance
Transfer money from your business account to your personal account, documenting it as an owner's draw
Record the transaction in your accounting system and track total draws for tax reporting purposes
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Guaranteed Payment
The LLC pays you a fixed amount regardless of whether the business is profitable, similar to a salary but without payroll taxes. This payment is for services you provide to the LLC and is deductible as a business expense. Unlike owner's draws, guaranteed payments are made before calculating remaining profits for distribution.
Tax treatment: Guaranteed payments are subject to federal self-employment tax (15.3%) and Idaho state income tax (1.125% to 6.925%). The LLC deducts guaranteed payments as a business expense, reducing the overall taxable income. You'll receive both a 1099-NEC for guaranteed payments and a K-1 for your share of remaining profits.
How to do it
Document the guaranteed payment amount and schedule in your LLC operating agreement
Set up regular payments from the business account, treating them as a business expense
Issue yourself a 1099-NEC at year-end and report the income on Schedule SE for self-employment tax
3
Salary via S-Corp Election
Your LLC elects to be taxed as an S-Corporation, allowing you to become an employee who receives a reasonable salary subject to payroll taxes. Any additional profits can be distributed as dividends, which aren't subject to self-employment tax. This creates potential tax savings but requires more complex payroll administration.
Tax treatment: Your salary is subject to payroll taxes (7.65% employee + 7.65% employer portions) plus Idaho income tax withholding. Distributions beyond your salary are subject only to Idaho income tax (1.125% to 6.925%) and federal income tax, avoiding the 15.3% self-employment tax. Idaho follows federal S-Corp tax treatment with no additional state-level requirements.
How to do it
File Form 2553 with the IRS to elect S-Corp taxation and ensure Idaho recognizes the election
Set up payroll to pay yourself a reasonable salary with proper tax withholdings through an Idaho-registered payroll service
Take additional distributions as needed, ensuring they're properly documented and not subject to payroll taxes
Idaho Tax Notes for LLC Owners
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Income Tax
Idaho imposes state income tax on LLC owners at rates ranging from 1.125% to 6.925% based on income level. LLC income passes through to owners' personal returns, and Idaho generally conforms to federal tax treatment for LLC elections.
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Self-Employment Tax
Idaho LLC owners are subject to federal self-employment tax (15.3%) on their share of LLC profits, but Idaho doesn't impose additional state self-employment tax. This applies to owner's draws and guaranteed payments but not to S-Corp salary distributions.
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Estimated Taxes
Idaho LLC owners must make quarterly estimated tax payments if they expect to owe $500 or more in Idaho tax. Due dates are April 15, June 15, September 15, and January 15, matching federal deadlines. Use Idaho Form 51 to calculate and submit estimated payments.
Common Mistakes to Avoid
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Mixing personal and business funds by using business accounts for personal expenses or failing to properly document owner's draws as business transactions
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Not paying quarterly estimated taxes to Idaho and the IRS, resulting in penalties and interest charges when annual returns are filed
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Failing to document draws and payments properly in accounting records, making it difficult to track owner's equity and prepare accurate tax returns
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Paying yourself too much during cash flow problems or too little when the business is profitable, both of which can create financial planning issues