The Rules of Paying Yourself a Bonus, Part 2

Guidelines for those in partnerships, limited partnerships and multi-member LLCs
1 min read
Opinions expressed by Entrepreneur contributors are their own.

As a partner in a Partnership, a limited partner in a Limited Partnership or a member in a multiple-member LLC, you can take dollars out of the business as either a distribution of profit or a guaranteed payment. A partner or an LLC multiple member can receive distributions for their pro-rata share of profit without the dollar amounts of these distributions having any impact on their income tax liability. Partners and LLC multiple members can also take dollars out of their business in the form of guaranteed payments for services rendered. And if you have previously loaned the partnership or LLC dollars, you can take dollars out in the form of a repayment of your loan, plus interest.

Source: "Taking Profits Legally--and With Minimal Tax Impact"

More from Entrepreneur

Get heaping discounts to books you love delivered straight to your inbox. We’ll feature a different book each week and share exclusive deals you won’t find anywhere else.
Jumpstart Your Business. Entrepreneur Insider is your all-access pass to the skills, experts, and network you need to get your business off the ground—or take it to the next level.
Create your business plan in half the time with twice the impact using Entrepreneur's BIZ PLANNING PLUS powered by LivePlan. Try risk free for 60 days.

Latest on Entrepreneur

Entrepreneur Media, Inc. values your privacy. In order to understand how people use our site generally, and to create more valuable experiences for you, we may collect data about your use of this site (both directly and through our partners). By continuing to use this site, you are agreeing to the use of that data. For more information on our data policies, please visit our Privacy Policy.