1) How much do we pay ourselves? Is it a percentage of income that we made that month in the business, and based on our LLC ownership? (I owns 50%) Or is a fixed rate per month? Are there any tax advantages to one over the other? These distributions aren?t expenses I don?t believe, correct?=======>>It depends; A partnership /MMLLC agreement is like a contract. You can do anything you want as long as it is layed out in the agreement. Ownership and profit sharing can be totally separate issues. You do not need to split profits based on ownership percentage. The default provisions of state law that mandate allocations of profits to members applies only in the absence of an agreement between the members. One of the benefits of the LLC is its flexibility in designing an owner profit-and-loss structure. By adopting an operating agreement, the members can decide to allocate profits or losses in a proportion that is not equal to the members' ownership interests
2) When do we pay ourselves? Is it only during a certain time of the year, or whenever we feel like it?=====>>Unless you are a regular W2 employee of the LLC , you donot get paid a salary/wage; How a member of an LLC is paid depends in part on how the company is taxed. A MMLLC is taxed as a partnership by default, and by law a member/partner NOT an EMPLOYEE, cannot be paid a salary or wage for services provided as a partner. The LLC's Operating Agreement usually states the percentage of the company's profit each member is entitled to receive. you as a member do not get paid but usually receive distribution of profits ;members may elect not to receive any distribution of profits so the money can be reinvested in the company. Alternatively, a member can be paid a regular salary based on her share of the estimated profits. A member's salary, however, cannot be deducted from the company's income as a cost of doing business.
4) How do we label it in QuickBooks? Is it a distribution or something else?====>I guess you need to contact QB vendor for professional help/advice; however, say, at the end of the year your llc has made a net profit , on the first day of the new fiscal year QB moves that Net profit to the retained earnings account.Then you need to do a journal entry to distribute net profit to the partners
Dr jE for the full amount in the account
cr partner 1 equity for 50%
cr partner 2 equity for 50. As you can see, your LLC,partnership, does not pay income taxes, the partners receive a Sch K-1 which is created as part of the form 1065. That K-1 provides each partner with the amounts of income and expenses for the business allocated to the partner and he uses that information to fill out his personal income tax return on 1040.Income during the fiscal year is not "deposited" to the partners. If the partners need money from the company then the company writes them a check and uses partner equity drawing as the expense for the check.
I recommend you have the following for owner/partner equity accounts (one set for each partner if a partnership)
When you clear (roll up) jE to equity, you do journal entries to roll up drawing and investment too