I have an LLC that doesn't make money, and I have a full-time job. I'm considering having part of my income from my employer go to my personal bank account (to save for retirement), and the rest go to my LLCs bank account so I can 1) potentially keep some as savings for the LLC for future growth, and 2) use to pay myself for daily expenses, rent, etc. Eventually if the LLC becomes profitable and I leave my job I can keep this arrangement and won't have to reshuffle bank accounts.

The sum of payments to myself from the LLC plus the sum of payments directly from my employer to my retirement savings account total the same amount as what's paid from my employer in the first place, so tax liability is presumably the same.

Complications I'm worried about: Double-taxation. Looking shady.

Is there anything wrong with this idea?

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    Assuming we're talking about a US LLC, how is your LLC classified? Are you filing as a corporation, or partnership? Is it a single-member LLC? What state? What do you want to accomplish, exactly?
    – magma
    Commented Dec 16, 2021 at 3:34
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    It seems an odd idea to me, that an employer would even be prepared to pay money to an entity with which it has no relationship. It is you that is due a salary, so I would expect them to want to pay you alone. And how would the LLC account for this arrival of extra funds?
    – Steve Kidd
    Commented Dec 16, 2021 at 3:43
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    You can't do this as an employee. If you quite your job and get rehired as a contractor, then you can do this.
    – minou
    Commented Dec 16, 2021 at 13:35

2 Answers 2


Your question is Is there anything wrong with this idea?, which I find hard to answer both because wrong is a relative term, and because it's not entirely clear to me what you want to accomplish, which would help with establishing a rough cost-benefit analysis.

So please forgive me for offering unordered thoughts:

  • It is unclear to me whether you are thinking about diverting your salary from your personal bank account to your LLC bank account, or you're thinking about asking your current employer to just send your salary to your LLC bank account. I believe the latter is unfeasible, because your employer cannot send money to another entity, and you're an employee, not an independent contractor (even setting aside for a moment what your HR reaction might be). If, instead, you want to receive your salary in your personal bank account, and then transfer it to your LLC, you can - this can be done either as your personal loan to the business or an equity contribution.

  • A contribution to an LLC taxed as a disregarded entity has no tax consequences because the entity is not considered an entity separate from its owner. If it's a partnership or filing as a corporation, I believe that there are tax implications which you might find unfavorable.

  • It seems to be implied that the LLC is doing some kind of activity which is currently unprofitable; one would assume that this activity has nothing to do with the work you're doing for your employer. Keep in mind that some employers have very strict rules about moonlighting. In any case, you're alerting your employer that you have a LLC and a side activity, which might be undesirable.

  • If you transfer money into your LLC and then use your LLC for your daily expenses, you might be piercing the corporate veil. "Piercing the corporate veil" refers to a situation in which courts put aside limited liability and hold a corporation's shareholders or directors personally liable for the corporation’s actions or debts. (Paying yourself a salary is a legitimate business purpose and does not constitute commingling of funds; but then, why don't you keep the salary from your employer to yourself in the first place?)

  • Assuming you're using credit cards for your expenses, you will probably stop building your credit (although you might build credit for your LLC).

Overall, it's not very clear what you want to accomplish and what the advantages would be for you. You mention:

  1. potentially keep some as savings for the LLC for future growth

But there's no need for this convoluted solution: just save money as an individual, and transfer these savings your LLC, as an equity contribution.

  1. use to pay myself for daily expenses, rent, etc.

Assuming that you're somehow neutral and you don't incur any expenses or taxes when transferring first to your LLC, and then back to yourself, what's the benefit here?

This might be an XY problem, and you might want to accomplish something that is not clear here, and with maybe a different solution.

  • Regarding the bank account: the employer sends money to one or more accounts of my choice. I specify the account and routing numbers. That's it. Commented Dec 16, 2021 at 4:45
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    If you persuade your employer to send salary owed to you personally to an account of your LLC that will almost certainly cause the government to "pierce the corporate veil" and consider you and the company as a single entity. Commented Dec 16, 2021 at 15:27

If you're thinking of doing this so that you can contribute to a self-employment retirement account (SEP 401K, SIMPLE IRA, etc), forget it. Funds going into the LLC must be legitimate income. Having an unrelated employer deposit payroll from other activities into the LLC's bank account maybe technically possible but it is not legitimate income for the LLC.

It wouldn't be any more valid than if you happened to have a bunch of cash in your personal savings account and you transferred it into the LLC account.

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