3 Ways to Pay Yourself from Your New Hampshire LLC
1
Owner's Draw
You transfer money from your business bank account to your personal account whenever needed, up to your ownership percentage. This isn't technically a salary—you're withdrawing your share of the business profits. The amount and timing are entirely at your discretion as the owner.
Tax treatment: Owner's draws aren't taxed when you take them since you already pay taxes on all LLC profits whether distributed or not. In New Hampshire, you won't pay state income tax on these draws, but you'll owe federal income tax and self-employment tax on your share of LLC profits. Self-employment tax applies to your entire profit share, not just what you actually withdraw.
How to do it
Ensure your LLC has sufficient cash flow and retained earnings to cover the draw amount
Transfer funds from your business bank account to your personal account using a clear transaction description
Record the draw in your accounting system as an owner distribution against your capital account
2
Guaranteed Payment
The LLC pays you a predetermined amount regardless of whether the business is profitable, similar to a salary but without payroll taxes. These payments are treated as business expenses that reduce the LLC's taxable income. The amount is typically set in your operating agreement based on your role and responsibilities.
Tax treatment: Guaranteed payments are subject to federal income tax and self-employment tax, just like owner's draws. New Hampshire doesn't impose state income tax, so you'll only deal with federal obligations. The LLC can deduct guaranteed payments as business expenses, reducing overall taxable income for all members.
How to do it
Document the guaranteed payment amount and schedule in your LLC operating agreement
Set up regular transfers from the business account, treating payments as business expenses in your books
Report guaranteed payments on Schedule K-1 and pay self-employment tax on the full amount
3
Salary via S-Corp Election
Your LLC elects S-Corporation tax status with the IRS, allowing you to become an employee of your own business. You must pay yourself a reasonable salary subject to payroll taxes, then take additional profits as distributions that avoid self-employment tax. This creates potential tax savings but adds payroll compliance requirements.
Tax treatment: Your W-2 salary is subject to federal income tax and payroll taxes (Social Security and Medicare), while distributions are only subject to federal income tax. New Hampshire has no state income tax, simplifying the equation. The self-employment tax savings can be significant, but you must ensure your salary meets IRS reasonableness standards.
How to do it
File Form 2553 with the IRS to elect S-Corporation tax treatment for your LLC
Set up payroll processing to pay yourself a reasonable salary with proper tax withholdings
Take additional compensation as distributions from remaining profits after paying your salary
New Hampshire Tax Notes for LLC Owners
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Income Tax
New Hampshire has no state income tax on wages or business income, making it one of the most tax-friendly states for LLC owners. You'll only need to worry about federal income taxes on your LLC earnings.
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Self-Employment Tax
New Hampshire LLC owners must pay federal self-employment tax of 15.3% on their share of business profits, regardless of how much they actually withdraw. This applies to both owner's draws and guaranteed payments, but not to S-Corp distributions.
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Estimated Taxes
New Hampshire LLC owners typically need to make quarterly estimated federal tax payments to cover income tax and self-employment tax since no taxes are withheld from business profits. Payments are due on the 15th of January, April, June, and September.
Common Mistakes to Avoid
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Mixing personal and business expenses by using business accounts for personal purchases instead of taking formal owner's draws
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Failing to make quarterly estimated tax payments and facing penalties when annual taxes are due
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Not properly documenting owner's draws and guaranteed payments, which can cause problems during audits or when seeking business loans
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Taking too little compensation and starving personal finances, or taking too much and leaving insufficient working capital for business operations