3 Ways to Pay Yourself from Your West Virginia LLC
1
Owner's Draw
You simply transfer money from your LLC's business account to your personal account whenever needed. This is the most straightforward method and doesn't involve formal payroll. The amount you draw can vary based on business cash flow and personal needs.
Tax treatment: Owner's draws are not taxed when taken, but LLC profits are subject to self-employment tax on your personal tax return. West Virginia taxes LLC income at rates from 3% to 6.5% depending on your income level. You'll pay federal self-employment tax of 15.3% on net LLC earnings.
How to do it
Ensure your LLC has sufficient cash flow to cover the draw and business expenses
Transfer funds from your business account to your personal account
Document the transaction as an owner's draw in your accounting records
2
Guaranteed Payment
Guaranteed payments are fixed amounts paid to LLC members regardless of the business's profitability. These payments are made for services performed for the LLC and are deducted as business expenses. The LLC reports these payments on IRS Form 1065, and members receive Schedule K-1s showing their share.
Tax treatment: Guaranteed payments are treated as ordinary income subject to self-employment tax for the recipient. West Virginia taxes these payments as regular income at rates from 3% to 6.5%. The LLC can deduct guaranteed payments as business expenses, reducing overall LLC profits.
How to do it
Establish guaranteed payment amounts in your LLC operating agreement
Make regular payments as specified and document them as guaranteed payments
Report guaranteed payments on Form 1065 and issue Schedule K-1s to members
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, while remaining profits can be distributed without self-employment tax. This creates potential tax savings on the profit distributions.
Tax treatment: Your salary is subject to payroll taxes (15.3% total) and West Virginia income tax withholding. Profit distributions above your salary are not subject to self-employment tax but are still taxed as ordinary income. West Virginia doesn't have special S-Corp tax rules, so distributions follow federal treatment.
How to do it
File Form 2553 with the IRS to elect S-Corporation tax status for your LLC
Set up payroll to pay yourself a reasonable salary with proper tax withholdings
Distribute remaining profits to yourself as distributions (not subject to self-employment tax)
West Virginia Tax Notes for LLC Owners
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Income Tax
West Virginia taxes LLC owner income at graduated rates from 3% to 6.5% depending on income level. Single filers pay the top rate on income over $60,000, while married filing jointly reaches the top rate at $120,000.
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Self-Employment Tax
West Virginia LLC owners must pay federal self-employment tax of 15.3% on net LLC earnings. The state doesn't impose additional self-employment tax, but LLC income is subject to West Virginia personal income tax rates.
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Estimated Taxes
West Virginia LLC owners must make quarterly estimated tax payments if they expect to owe $200 or more in state tax. Federal quarterly payments are required if you expect to owe $1,000 or more. Payments are due January 15, April 15, June 15, and September 15.
Common Mistakes to Avoid
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Mixing personal and business funds by not maintaining separate bank accounts for LLC transactions and personal expenses
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Failing to make quarterly estimated tax payments to both West Virginia and the IRS, resulting in penalties and interest
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Not properly documenting owner's draws or guaranteed payments, creating problems during tax preparation or audits
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Either paying yourself too little (not taking reasonable compensation for S-Corp elections) or too much (leaving insufficient cash for business operations)