As far as lending between LLCs, absolutely you can. You can also do a distribution from one LLC / contribution to the other LLC like a CPA above described.
Get $500 to $5.5 million to fund your business
Loans guaranteed by SBA range from small to large and can be used for most business purposes, including long-term fixed assets and operating capital.
One LLC can fund another LLC either via an equity investment or a loan. There are tax and asset protection considerations for each type of funding you should discuss with a business attorney.
In the case of money transfers, these can be done as a loan or by purchasing shares in the other company, or through dividend payments if shares in the transferor company are owned by the recipient company. However, depending on whether or not the companies are both part of the same group, there can be taxes to pay.
The Bottom Line
Business owners often borrow from their businesses. As long as the transaction is properly documented, you shouldn't have any problems.
Embezzlement occurs when a person is entrusted with money and misappropriates money for personal use. If you are the company's sole owner, you cannot steal from your company; meaning, you cannot embezzle money from yourself.
If you have a large estate, an LLC can be used to pass assets to children without being subject to gift and estate taxes. In 2021, the estate tax exemption is $11.7 million for individuals and $23.4 million for couples.
Getting paid as a multi-member LLC
The exception to the rule is if you elect to be treated as a corporation for tax purposes. Each member has a capital account. To get paid, LLC members take a draw from their capital account. Payment is usually made by a business check.
Each LLC is a separate legal entity, so there are two ways for one LLC to fund another. The first is to provide a business loan. Many companies take out business loans when they need funds to launch their new ventures.
If you have good credit and can meet the lender's eligibility guidelines, getting a business loan with an LLC can often be easy.
A new LLC starts with no credit score.
The company is liable for the debt unless you cosign the LLC loan or provide a personal guarantee. If you do either, you become personally liable if the business defaults on the loan.
You and/or your business partners can agree to pay yourselves however often and in the amount you choose. Owner's distribution means you and/or your partners can simply write yourselves checks or transfer the money for your business profits from your LLC's business bank account to your personal bank accounts.
Can your LLC pay your mortgage? Your LLC can pay the mortgage on properties owned by the LLC, as these are legitimate business expenses. However, for personal property not under the LLC, mortgage payments should typically come from personal accounts to avoid complications with lenders or the IRS.
That's called an owner's draw. You can simply write yourself a check or transfer the money for your business profits from your LLC's business bank account to your personal bank account. Easy as that!
In general, an active member of an LLC cannot receive what is commonly known as W-2 income. This is due to the fact that an active member is not considered to be an employee of an LLC. The only exception to this is if an LLC has elected, through the IRS, to be treated as a corporation for tax purposes.
A guaranteed payment is the fixed amount that owners or partners agree to receive, no matter how the business performs. In other words, it's a set salary, ensuring you're compensated for your time and effort!
Yes, you can use personal money to fund an LLC.
The IRS allows you to gift up to $18,000 in money or property to an individual each year without having to report it to the IRS (for the tax year 2024). Even if your gifts exceed $18,000, it's still unlikely you'd have to pay taxes unless you've surpassed the lifetime gift tax exclusion ($13.61 million in 2024).
The answer is yes. There are ways to legally borrow money from your business as an LLC member. However, unlike withdrawing a salary or making a distribution, borrowing money from an LLC must be carefully structured and documented.
If your business is a corporation or limited liability corporation, your personal assets are protected from professional liabilities if your business is sued or fails. However, if you pay personal bills from your business account, you can negate this protection.
This transfer is considered as an "income" and can be transferred to your personal account as long as you have paid the necessary taxes on it. So, it is important to make sure that you have correctly reported and paid any taxes due on the income that you are transferring.