Transferring Money from LLC to Personal Bank Account

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clayr361
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Joined: Tue Aug 19, 2014 2:48 pm

Transferring Money from LLC to Personal Bank Account

Post by clayr361 » Thu Jul 12, 2018 10:53 am

Is there a special process involved for transferring money from a bank account under an LLC to a personal account. What tax implications are involved if any?

My father has a bank account under an LLC. It is earning 0% interest. He has a rather large amount in it. I would like to open him an ALLY account and put the money in their interest savings and some CD's. He does not want any risky investments and I have talked to him about the ALLY option and he likes the idea of it. Any other investment ideas would be welcome from the community but again, nothing risky. He has other funds already in riskier investments.

My questions is what is the process? Is it as simple as opening a new personal account and doing an online transfer? Does he need to write checks from the LLC and cash them into his new personal Ally account? The transfer amounts would be rather large.

Thanks in advance for any advice.

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bogleblitz
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Re: Transferring Money from LLC to Personal Bank Account

Post by bogleblitz » Thu Jul 12, 2018 11:04 am

For large amount, write a check. For small amount, you can do online transfer. There are no tax consequences.
It is as simple as open a ally account.

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Hayden
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Re: Transferring Money from LLC to Personal Bank Account

Post by Hayden » Thu Jul 12, 2018 11:04 am

Taking money out of an LLC and investing the money to earn some interest are two completely separate things.

Does he want to take the money out of the LLC?

If he wants to keep the money in the LLC for some business purpose, the company can invest the money. The company can own CDs. The company can even have an investment account, e.g., at Vanguard.

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Hayden
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Re: Transferring Money from LLC to Personal Bank Account

Post by Hayden » Thu Jul 12, 2018 11:07 am

bogleblitz wrote:
Thu Jul 12, 2018 11:04 am
For large amount, write a check. For small amount, you can do online transfer. There are no tax consequences.
It is as simple as open a ally account.
There may be tax consequences. We would need to know more about how the business is structured to know for sure. For example, an LLC can be taxed as an S Corp. If his business is taxed as an S Corp, there are issues to understand before taking out money.

clayr361
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Re: Transferring Money from LLC to Personal Bank Account

Post by clayr361 » Thu Jul 12, 2018 11:10 am

Hayden wrote:
Thu Jul 12, 2018 11:04 am
Taking money out of an LLC and investing the money to earn some interest are two completely separate things.

Does he want to take the money out of the LLC?

If he wants to keep the money in the LLC for some business purpose, the company can invest the money. The company can own CDs. The company can even have an investment account, e.g., at Vanguard.
He doesn't care to have the money stay in the LLC. There are no expenses that need to be paid out. It is a bank account under an LLC that receives deposits (oil royalties in this case).

Spirit Rider
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Re: Transferring Money from LLC to Personal Bank Account

Post by Spirit Rider » Thu Jul 12, 2018 4:59 pm

You need to indicate the tax structure of the LLC.

If is it a single member LLC it is a treated as a disregarded entity by the IRS. It is his money, he can transfer it any way he chooses.

As noted, it is slightly more involved if it is an S-Corp, but there should be no tax issues. An S-Corp is a pass-thru entity and the income has already been "distributed" and taxed to the individual whether it still resides in an S-Corp account or not.

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