I have created a small-business with two other partners two years ago in the IT field. The
business is an LLC. We are experiencing huge growth this year. We have
decided to work full-time on the business this year and get
compensated. I understand that an LLC can pay its members a "Guaranteed
Payment" for services rendered. The three of us perform similar tasks.
However we live in different states with different standards of living (FL, NY, MA).
What should be a fair way to calculate the "Guaranteed Payments" for
each one? Should we get the same amounts or should that amount take into
consideration the standard of living for each state? What other
businesses in similar situation typically do?
I do understand that an LLC member needs to pay taxes on both the guaranteed payment and his/her share of the profit