Startup LLC with recent revenue(approx. $500k annually). Three partners. Do we pay each a salary or a draw vs. profit? Percent of ownership is 50%, 30%, and 20%. Amount of work for each varies as does experience and initial investment. How should payouts work? Which way produces minimum in tax expense? Any feedback helpful. Thanks. ACC
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Why not pay each partner a fair salary based on their work then the rest as dividend based on the percentage?
If the 20% partner contribute the most to the running of the business, his salary will be the highest among the three since it is based on the job performed. However, his dividend portion will be the smallest.