The company itself · A term for founders abroad
What is an LLC distribution?
owner's draw. Money an LLC pays its owners from the company; how the owner of a single-member LLC pays themselves, reportable on Form 5472 from a foreign-owned one.
Checked against the IRS's instructions and the states' own rules. Reviewed by Saais Patel, compliance reviewer.
Term 27 of 105 in the glossary, filed under D.IRS: instructions for Form 5472
Distribution, for a founder abroad.
The owner of a single-member LLC doesn't take a salary and isn't the company's employee. They pay themselves by transferring money from the company's account to their own, recorded as a distribution, sometimes called an owner's draw.
A distribution isn't a tax event in the US for a disregarded LLC: the profit is the owner's whether or not it's paid out. For a foreign owner it's a reportable transaction on Form 5472, and your home country decides how it's taxed there. In a multi-member LLC, distributions follow the operating agreement.
Sources: IRS: instructions for Form 5472.
Read next · guide · 3 minKeeping the company's money separate from yours: why it matters and how to do itWhat founders ask next.
- How do I pay myself from my US LLC?
- Transfer money from the company's account to yours and record it as a distribution. Wise or a local account usually converts more cheaply than a bank wire.
- Is a distribution the same as a dividend?
- No. A dividend comes from a corporation and has US tax withheld for a foreign shareholder. A distribution from a single-member LLC has none.
03 · See also
- The company itselfCapital contributionMoney or property an owner puts into their company, including company costs the owner paid personally; reportable on Form 5472 from a foreign owner.Read the term
- The EIN and IRS formsReportable transactionAny exchange of money or property between a US company and its foreign owner that goes on Form 5472, including the money used to form the company.Read the term
- The company itselfSingle-member LLCAn LLC with one owner; a disregarded entity for US income tax and, when the owner is foreign, a Form 5472 filer every year.Read the term
- The company itselfLLCA US company whose owners aren't personally liable for its debts, and whose profit is taxed once, to the owners, unless it elects otherwise.Read the term
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