STUDIO NOIR · Founder Distributions
When Taj takes money out of the business, how much, under what conditions.
A “distribution” is the LLC equivalent of a dividend or paycheck for an owner. Because STUDIO NOIR is set up as an LLC (a pass-through entity), Taj pays taxes on the business income whether she takes cash out or not, but distributions are the actual cash going to her personal account.
The governing rule
Distributions are earned when the business proves it can sustain them. Taj built this. She does not take a check that breaks the machine.
Every distribution has to satisfy the waterfall (order of priorities) below before it goes out.
Phase 1 distribution schedule
Months 1 through 6 of operations (Jul 2027 through Dec 2027)
Distribution to Taj: $0.
The business is ramping. Reserve may get touched. No exceptions to zero-distribution in the first 6 months.
Taj carries her personal expenses from her own savings, not from STUDIO NOIR.
Months 7 through 10 (Jan 2028 through Apr 2028)
Distribution to Taj: $0 to $2,000/mo, only if all conditions met: 1. Reserve balance at $25,000 (fully refilled if drawn earlier) 2. Operating account has at least one full month of opex on hand ($10,000) 3. Prior 3 months have been cash-flow positive
If any condition is not met, distribution is $0 that month.
Months 11 through 12 (May 2028 through Jun 2028)
Distribution to Taj: up to $6,000/mo, only if all conditions met.
Same conditions as above. Distribution is discretionary, not automatic.
Year 2 (Jul 2028 through Jun 2029)
Distribution to Taj: $6,000 to $9,000/mo, growing across the year.
Total Year 2 distributions to Taj (base case): approximately $95,000.
Year 3 (Jul 2029 through Jun 2030), assuming Phase 1 only (no Phase 2 yet)
Distribution to Taj: $9,000 to $12,000/mo.
Total Year 3 distributions to Taj (base case): approximately $130,000.
The distribution waterfall (order of priorities every month)
Before any distribution is authorized, every one of these must be true:
| Priority | Requirement | Status check |
|---|---|---|
| 1 | Rent, insurance, utilities paid current | Required |
| 2 | Contract instructors paid current | Required |
| 3 | Software subscriptions + supplies paid current | Required |
| 4 | Reserve balance at $25,000 (or on schedule to be refilled within 60 days) | Required |
| 5 | Tax reserve set aside (Taj holds this personally, see below) | Required |
| 6 | Operating account has at least one month opex cushion | Required |
| 7 | Trill + Taj first-Monday review confirms the number | Required |
If any of these fail, distribution that month is $0. No exceptions.
Tax reserve (Taj’s personal responsibility)
STUDIO NOIR is a pass-through LLC. That means Taj personally owes federal income tax, NC state income tax, and self-employment tax on her share of the profits, whether or not the profits are distributed to her.
Rough tax burden on Phase 1 distributions: - Federal income tax: 22% to 32% depending on Taj’s other income - NC state income tax: 4.75% - Self-employment tax (Social Security + Medicare): 15.3% on the first ~$170K - Combined: roughly 30 to 40% of distributions.
Rule: Taj sets aside 35% of every distribution into a separate personal savings account labeled “STUDIO NOIR TAX RESERVE.”
Example: if Taj takes a $6,000 distribution in May 2028, $2,100 goes into her tax reserve account. She pays estimated quarterly taxes from that account throughout the year.
She does NOT use tax reserve money for personal expenses.
Phase 1 total compensation summary
| Year | Distribution to Taj | Tax reserve she should set aside | Net after tax |
|---|---|---|---|
| Year 1 (Jul 2027 to Jun 2028) | $6,000 to $12,000 | $2,100 to $4,200 | $3,900 to $7,800 |
| Year 2 (Jul 2028 to Jun 2029) | $95,000 | $33,000 | $62,000 |
| Year 3 (Jul 2029 to Jun 2030) | $130,000 | $46,000 | $84,000 |
Cumulative net cash to Taj through Phase 1: about $155,000 over 3 years.
That’s her return on the $85K she put in. Plus she still owns 90% of the business, which is worth something (see below).
Trill’s compensation Phase 1
Trill takes $0 in salary or distribution from STUDIO NOIR Phase 1. His compensation:
- 10% OpCo equity (equity appreciation)
- 20% IP LLC equity (bigger stake because THE NOIR INVITATIONAL flows through here later)
- Reserved right to invoice TWG production fees on THE NOIR INVITATIONAL starting Phase 2
That’s it Phase 1. Deliberate. Keeps cash with Taj.
What the business is worth after Phase 1 (rough estimate)
A boutique fitness business with steady cash flow can be valued at 2x to 3x seller’s discretionary earnings (SDE, meaning what the owner takes home plus any add-backs).
At Year 3 of Phase 1 (if Phase 2 not activated): - SDE (owner cash flow) = $153K/yr - Business worth: $300K to $460K if we ever wanted to sell
Not the flagship number. But real value on top of the annual cash flow.
If Phase 2 activates, business value grows dramatically (see 03_STRATEGIC_THESIS for Phase 2 and 3 valuation targets).
Phase 2 distribution changes (rebuilt in 2028)
Once Phase 2 flagship opens, distributions get bigger and more complex: - W-2 salary for Taj begins ($100K to $250K/yr) so she has payroll income for mortgage qualification and social security accumulation - Distributions grow to $250K to $500K/yr sustained - Investor equity holders (if any from Phase 2 raise) receive their pro-rata distributions - Reserve floor changes to a % of monthly opex (probably 3 to 6 months of opex, so $250K to $600K reserve at flagship scale)
Full Phase 2 distribution rules drafted in 2028 alongside Phase 2 capital raise.
Governance rules (protects Taj and the business)
- Every distribution requires Trill + Taj sign-off. No unilateral distributions.
- Tax reserve is not optional. If Taj skips it, she owes at tax time and it comes out of future distributions.
- Reserve draw triggers pause. If we dip into reserve, next month’s distribution is automatically $0 until reserve is refilled.
- No advance distributions. We do not distribute against future expected cash flow. Cash has to actually be in the account.
- Distribution amounts get logged in the cash tracker. Complete record.
- Annual review with a CPA. Taj works with a CPA who reviews the year and confirms tax filings are clean. Small business CPA in the Triangle, roughly $2,000/yr.
Emergency distribution rules (bad month, bad quarter)
If Taj has a personal emergency (medical, family, unexpected life event) that requires a larger-than-normal distribution:
- Trill + Taj call to discuss
- Reserve balance and operating cushion are checked
- If the business can absorb it without touching reserve or defaulting on rent, we authorize
- If it would touch reserve, we borrow personally instead (Trill or Taj’s own credit) and pay ourselves back from future business distributions
The business’s health always comes first. Emergencies get handled through personal borrowing, not by breaking the reserve.
Summary
- Phase 1 distributions are small at first (Year 1: minimal), grow steadily (Year 2: $95K), and settle at real money by Year 3 ($130K/yr).
- Every distribution follows the waterfall.
- Taj sets aside 35% of every distribution for taxes.
- Trill takes $0 Phase 1. His return is equity + Phase 2/3 upside.
- Reserve gets refilled before any distribution.
Distributions are the reward for building a real business. They come after the business proves it can sustain them, not before.