The Rules of Paying Yourself a Bonus, Part 4

When your business is a combination two structures, what should you do?
  • ---Shares

In some instances, a business may be organized as either the combination of:

  • A Limited Partnership and a C Corporation
  • An LLC and a C Corporation

The Limited Partnership mentioned above can compensate its partners, and the LLC can compensate its members. The C Corporation under either scenario above can be compensated using distributions of profit. Individual partners in the Limited Partnership and C Corporation scenario and members in the LLC and C Corporation scenario may be compensated using guaranteed payments. The C Corporation can be compensated using consulting and management fees.

Finally, be certain to reimburse yourself for any expenses your business owes you for any out-of-pocket expenditures you've incurred to date. These reimbursements create tax deductions for your business and allow you to receive these reimbursement dollars tax-free.

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

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