Owner Draw

[chantrahop]

Hello, I am part of a multi-member LLC. If a member draws from the account then reinvest the amount that was drawn, would this be categorized as a draw then place the money back in the equity account once returned? If it is considered a draw will they be taxed on it even if the money was reinvested back in the company? Thanks for your help.

[tylerhutchinson]

I would suggest talking to a tax professional on that, but I think you can categorize that in your taxes to prevent being double taxed. I know I invest money into other companies and ventures and I categorize all of that out at the end of the year and my tax guy does something with the money that comes back after.

[Evan]

How is this multi-member LLC taxed? As a partnership, or did the LLC elect to be taxed as a corporation (or S-Corp)?

If you go to an ATM and withdraw $20, and then proceed to deposit that $20 -- did anything essentially happen? No. It likely will not have an affect.

If this wasn't a "draw" and was considered a Guaranteed Payment, it would have an impact, as there is a difference between a partner's draw and a GP.

Also, money you contribute to your business is EQUITY, not INCOME. It shouldn't appear as income on your profit & loss statement.

[newbiesb2011]

There is a huge difference between draws and regular payroll. However, every business is different! I would suggest that you consult an accountant or tax attorney to make sure you are handling these situation correctly. Otherwise, it could have major implications for you.