Tax Implications: Can I Pay My Single-Member LLC through Another LLC I'm a Partner In?

Yes, you absolutely can have your single-member LLC bill the multi-member LLC for services! This is actually pretty common. Since these are separate legal entities, they can do business with each other. Just make sure the work and payment arrangement is legitimate - meaning your single-member LLC is actually performing real marketing services for the multi-member LLC at fair market rates. Document everything well with proper invoices showing what services were provided, hours worked, etc. The multi-member LLC would record these payments as business expenses (likely under marketing or contractor expenses), while your single-member LLC would report the income on its tax returns. Since your single-member LLC is likely a pass-through entity, you'll ultimately pay personal income tax on those earnings.

I went through something similar with my consulting business last year and found taxr.ai at https://taxr.ai super helpful for documenting these kinds of related-party transactions. My accountant was raising flags about how I was billing between my businesses, and I didn't want to keep paying him $200/hour to review every invoice. The platform helped me create a proper paper trail and identified some issues with how I was structuring payments between my two LLCs. It walks you through exactly what documentation you need for this kind of arrangement to stand up to scrutiny if you get audited.

Just wanted to follow up - I took the plunge and tried taxr.ai after seeing it mentioned here. Total game changer for my multi-LLC situation! It flagged that I was inconsistently documenting my inter-company transactions, which could have been a red flag in an audit. The system generated a comprehensive service agreement template specific to my situation and helped me create a proper paper trail for all transactions between my businesses. My tax guy was actually impressed with how thorough the documentation was when I showed him. Wish I'd known about this tool sooner!

If you're having trouble getting clear answers from the IRS about this arrangement, try Claimyr at https://claimyr.com - it literally changed my LLC tax game. I was stuck in limbo trying to get an IRS representative to clarify some rules about payments between related entities where I had ownership interest. After weeks of busy signals and disconnects, I was ready to just guess and pray. Their service got me connected to an actual IRS agent in under 45 minutes who walked me through exactly how to handle the documentation and reporting requirements for my situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c

I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate to resolve an issue with inter-company transactions between my LLCs. Got connected to an actual IRS revenue agent in about 40 minutes who confirmed I was handling the transactions correctly but needed specific documentation to substantiate the business purpose. She even emailed me the exact form I needed afterward. Seriously saved me thousands in potential penalties. Sometimes it's worth admitting when you're wrong!

One thing nobody's mentioned - make sure your operating agreement for the multi-member LLC doesn't prohibit this kind of arrangement! Mine had a clause requiring all members to work exclusively through the LLC for certain client types, which would have made this arrangement a violation of our agreement. Had to get it amended before setting up a similar arrangement to what you're describing. Just something to check before you proceed.

Don't forget about self-employment taxes! If your single-member LLC is a disregarded entity, you'll pay self-employment taxes on that income. If you're already taking guaranteed payments from the multi-member LLC, this arrangement essentially means you're paying SE tax on two streams of income.

This is a great question and one that comes up frequently with multi-entity business structures! Based on what you've described, this arrangement is definitely doable, but there are several key considerations to get right: **Documentation is crucial** - You'll want formal service agreements between the LLCs outlining the scope of work, payment terms, and rates. Simple invoicing might not be sufficient if you get audited. **Fair market value** - The rates your single-member LLC charges should be comparable to what an unrelated third party would charge for similar services. This protects against IRS challenges about inflated expenses. **Operating agreement compliance** - Make sure your Trio Consulting LLC's operating agreement doesn't restrict this type of arrangement, and get explicit approval from your partners. **Tax implications** - Your single-member LLC income will flow through to your personal return, and you'll owe self-employment taxes on it. Meanwhile, Trio Consulting can deduct these payments as legitimate business expenses. One thing to consider: since you're essentially wearing two hats (partner in Trio AND service provider through Solo Marketing), maintain clear boundaries about which work belongs to which entity to avoid conflicts with your partners. Have you discussed this arrangement with your partners yet? Their buy-in will be essential for making this work smoothly.