âIn most LLCs, profit distribution is based on each member's proportional ownership interest," Chen says. Some LLCs elect an entirely different approach, and this is usually outlined in the LLC's operating agreement.An LLC is a âpass-through" organization in terms of taxes. âThis means the members pay the taxes instead of the LLC itself," Chen says. If it is a multi-member LLC being taxed as a partnership, the members of an LLC cannot be paid a salary. âProfits generated throughout the year are distributed to each member as income to be reported to the IRS," she adds. In terms of taxes, members have to pay taxes on the amount of profit that constitutes their share even if they do not withdraw this amount.