How Can an Owner Withdraw Cash Out of an LLC?

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Although investors in corporations can only extract cash or derive value from dividends they receive or gains in the stock prices when they sell, many small business owners can utilize a number of options to withdraw cash. As the owner of a small, private limited liability company, you can withdraw cash from your company through distributions, owner perks, salaries, bonuses and benefits. You can also employ family members and pay them a salary.

Limited Liability Company

A limited liability company is considered a separate entity for legal purposes. If you elect taxation as a corporation for your LLC, then it is also considered a separate entity for tax purposes. As an owner, you are a member and your ownership stake is called a membership interest. You can specify one or more managing members to manage the LLC or hire professional managers. Your LLC owns assets, incurs liabilities and pays its own bills.


If you are the sole member of your LLC, you can withdraw cash as owner distributions as your company’s profit and cash flow allow. If your LLC is a multi-member LLC, the members must agree on the distribution amount and timing. Although not required, it is best to document this agreement in case questions arise or support is needed for an audit. If your LLC regularly distributes profits, for example, quarterly, members can outline and implement a distribution policy to simplify the process.

Salary and Bonus

If you are a member involved in running or managing the LLC, you can draw a salary and earn a bonus. Your salary can increase as profits rise. If your LLC’s profits jump, you can take a larger salary or award yourself a large performance bonus. When W-2s change significantly from year to year, especially if the movement is up and down, the fluctuation can increase the likelihood of an audit. Bonuses tied to earnings generally do not. If your LLC has other members, the members must agree on your compensation and document the approval to avoid any question of impropriety and to protect the LLC in case of an IRS audit.

Benefits and Perks

As an owner, the LLC can provide you with benefits such as health care, life insurance and a cellphone. The LLC can create a retirement plan in which you participate. Depending on the retirement plan selected, this can be a significant cash withdrawal source for you. You can also implement perks like extended vacation time, company car, certain travel and meals. Check with the IRS on rules governing the taxation of these perks and benefits. If your LLC has multiple members, the other members must approve these perks and benefits unless a written policy regarding compensation and benefits already exists.

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