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One of the most important aspects of running an LLC is figuring out how to pay yourself properly. As a Virginia LLC owner, how you take money from your business depends on your LLC’s tax structure. Paying yourself the right way ensures compliance with tax laws, keeps your business finances organized, and helps you maximize your income.

*Expand each section below to learn more.

By default, a single-member LLC is taxed as a sole proprietorship, while a multi-member LLC is taxed as a partnership. This means that the LLC itself doesn’t pay taxes—profits pass through to the owner(s), who report income on their personal tax returns.

LLC owners have two main ways to take money from the business:

  1. Owner’s Draw – The simplest method for single-member LLCs and partnerships.
  2. Salary (W-2) – Required for LLCs taxed as an S-Corp or C-Corp.

If your Virginia LLC is taxed as a sole proprietorship or partnership, you can take an owner’s draw—which means withdrawing money from the business whenever needed.

How It Works:

  • Simply transfer money from your business account to your personal account.
  • No formal payroll setup is needed.
  • You don’t withhold taxes upfront, but you’re responsible for paying self-employment taxes (15.3% for Social Security & Medicare) on your earnings.

Best Practices for Owner’s Draws:

  • Set up regular withdrawals instead of taking large, inconsistent amounts.
  • Keep track of withdrawals for tax and accounting purposes.
  • Leave enough money in the business account for expenses and growth.

If your LLC elects S-Corp taxation, you must pay yourself a reasonable salary before taking additional profit distributions.

How It Works:

  • You set yourself up as an employee of your LLC.
  • The business runs payroll and withholds income tax, Social Security, and Medicare taxes from your paycheck.
  • Any remaining profit can be taken as a distribution, which isn’t subject to self-employment tax—potentially saving you money.

Why Choose the S-Corp Salary Method?

  • Reduces self-employment tax if your business profits are high.
  • Helps with IRS compliance—since the IRS requires S-Corp owners to take a “reasonable salary” before taking tax-free distributions.

Downsides of S-Corp Salary:

  • You must run payroll, which adds administrative work and costs.
  • The IRS monitors salaries—paying yourself too little or high can trigger an audit.

There’s no one-size-fits-all answer, but consider:

Industry standards—if taxed as an S-Corp, your salary should be comparable to similar roles in your field.

Your business profits—ensure you leave enough for taxes and expenses.

Your personal expenses—factor in what you need to cover bills and savings.

Regardless of how you pay yourself, you still owe taxes on your business income. Here’s what to expect:

  • Self-Employment Tax (15.3%) – Applies to owner’s draws from a default LLC.
  • Income Tax – Based on your personal tax bracket.
  • Quarterly Estimated Taxes – Required if you expect to owe more than $1,000 in taxes for the year.

To stay compliant, set aside 25-30% of your income for taxes and consider using accounting software or a tax professional to handle filings.

Paying yourself from your LLC is straightforward once you understand the different methods. Owner’s draws work well for single-member LLCs, while S-Corp owners must take a reasonable salary before distributions.

Whichever method you choose, keeping accurate records and setting aside money for taxes ensures smooth financial management for your Virginia LLC.

Can I just take money from my LLC whenever I want?
Yes, if your LLC is taxed as a sole proprietorship or partnership, you can take an owner’s draw. However, you must track withdrawals for tax purposes.

How do I pay myself if my LLC is taxed as an S-Corp?
You must run payroll and pay yourself a reasonable salary before taking any additional profit distributions.

How often should I pay myself from my LLC?
You can set a regular schedule (weekly, biweekly, or monthly) or take draws as needed, depending on your tax situation and business cash flow.