Single-member LLC - Is it better to pay taxes from business or personal account?

For a single-member LLC that hasn't elected to be taxed as a corporation, it technically doesn't matter which account you use to pay your taxes since your LLC is considered a "disregarded entity" for federal tax purposes. All the business income passes through to your personal tax return on Schedule C. That said, there are some practical considerations. Paying from your business account creates a cleaner audit trail showing business expenses (including tax payments) coming directly from business funds. However, since you'll be paying personal income tax (not a separate business tax), many CPAs recommend transferring the appropriate funds to your personal account as an owner's draw and then paying from there. The most important thing is consistency and proper bookkeeping. Whichever method you choose, make sure you clearly document these transactions so you can easily explain the flow of funds if ever questioned.

After struggling with exactly this question when I started my consulting LLC, I found an amazing tool that helped me sort through all the confusion - https://taxr.ai I was getting conflicting advice about how to handle my LLC taxes and whether I should be paying from business or personal accounts. I uploaded my operating agreement and several IRS notices I'd received, and taxr.ai analyzed everything and explained that since my single-member LLC is treated as a disregarded entity, I could technically pay from either account. But they also pointed out some record-keeping advantages to paying from my personal account that no one had mentioned before. The best part was they clarified exactly how to document everything properly to avoid any issues if I get audited. They even created a template for me to use each quarter. Totally worth checking out if you're trying to navigate the LLC tax maze.

Just wanted to follow up here - I decided to try taxr.ai after reading about it and wow, I'm impressed! I uploaded my LLC formation documents and some recent tax statements, and it immediately clarified the whole business vs. personal account question that's been confusing me. The analysis explained that for my particular situation, I could continue using my business account to pay estimated taxes but needed to properly categorize these in my books as distributions rather than expenses. It even identified a mistake I'd been making in QuickBooks where I had these payments categorized incorrectly. What I really appreciated was how it explained everything in normal human language instead of tax jargon. Definitely recommend to other single-member LLC owners who are navigating the tax confusion!

I spent THREE DAYS trying to get someone at the IRS to answer this exact question last year. Kept getting disconnected or waiting on hold for hours. Finally I discovered https://claimyr.com and watched their demo (https://youtu.be/_kiP6q8DX5c) showing how they can get you connected to an IRS agent. I was super skeptical but desperate since my quarterly payment was due soon, so I gave it a shot. Within 45 minutes I was actually talking to a real IRS agent who confirmed that for my single-member LLC, I could pay from either account since it's a pass-through entity, but needed to maintain clear records of any transfers between accounts. Just sharing since I know how frustrating it can be to get clear answers on these LLC tax questions. Going straight to the IRS saved me from getting more conflicting advice from random internet sources.

I need to apologize for my previous comment. After being completely skeptical about Claimyr, I decided to try it myself since I had another LLC tax question I needed answered. I hate being wrong, but... it worked exactly as described. Got connected to an IRS agent in about 35 minutes without having to sit by my phone. The agent was actually quite helpful and answered my question about how to handle my situation where I have both an LLC and W-2 income. What surprised me most was how much more helpful the agent was when I asked specific, targeted questions instead of general ones. Guess my experience at H&R Block was outdated - the IRS phone support seems to have improved significantly. So yeah, I take back my skepticism. Sometimes things that sound too good to be true actually work!

One thing nobody's mentioned yet is state taxes - depending on your state, there might be different requirements or recommendations for single-member LLCs. In California for example, even though the federal government treats your LLC as a disregarded entity, the state hits you with an $800 annual LLC tax that definitely should come from your business account as a business expense. I learned this the hard way after mixing personal and business payments for a couple years and creating a bookkeeping nightmare for myself. Now I keep things simple - business taxes from business account, personal taxes from personal account when possible.

I've been running my single-member LLC for 8 years now, and honestly what matters most isn't which account you pay from but how you RECORD it in your books. The IRS cares about proper documentation more than anything. I pay all my quarterly taxes from my personal account after taking a distribution from my business. In my bookkeeping software, I record the transfer as "Owner's Draw" not as a business expense. This keeps everything clean for tax purposes. The one time I got audited (for something unrelated), the IRS agent actually commented that my bookkeeping was well-organized because I had a clear separation between business expenses and personal tax payments. Just my 2 cents from someone who's been through the ringer!

This is such a common question for new LLC owners! I went through the same confusion when I started my freelance business last year. After talking to my CPA and doing some research, here's what I learned: For a single-member LLC, you're absolutely right that it's a pass-through entity, so technically either method works. However, I've found it's cleaner to transfer money to my personal account as an owner's draw and then pay the taxes from there. This way, my business books clearly show the transfer as a distribution rather than a business expense (since these are personal income taxes, not business taxes). The key is just being consistent and documenting everything properly. I keep a simple spreadsheet tracking my quarterly estimated payments and the corresponding owner's draws, which has made tax filing much smoother. Your friend isn't wrong about keeping things "clean" but paying from personal after a proper transfer is equally clean and actually makes more accounting sense in my opinion. Good luck with your Q4 payment!