Paying yourself?

[Skotter]

How to you business owners pay yourself? Do you cut a salary at the end of the month? or do you work percentage based? or do you just hog it all?



:sosad It's supposed to rain for the next 5 days....

 

[jimmybuffit]

I'm not sure I understand your question.



I get to keep all of the (gross) income.



Then, I get to pay all of the expenses incurred.



Then I really get to keep whatever (net) income might be left.



I operate as a sole proprietorship.



Jim

 

[Skotter]

I didn't know if you keep a seperate account and such to keep a percent of the net income in the business...

 

[joburnet]

I definatly have a seperate account for the business and then personal. We have employee's so we pay them out of the business account and then if there is money left over we can cut a check to ourselves. Make sure to take out taxes when you are paying yourself.

 

[imported_garyo]

How you pay yourself is going to depend on a many factors such as gross income, expenses, other sources of personal income, etc.



From a tax stand point, ideally you want to set your business up as an S-corporation. Since you are in a service industry where you are actively participating in the business, an S-corporation offers some income tax advantages. You can âہ“payâ€Â� yourself a âہ“reasonable salaryâ€Â�. On this amount you will be required to pay the self-employment tax, Medicare, social security, etc. The amount above the âہ“reasonable salaryâ€Â� can be taken as a distribution from the corporation. The distribution is not subject to self employment taxes that are associated with the âہ“salaryâ€Â� (however, it is still taxable income to you). On a sole proprietorship or limited liability company, this option is not available, which results in you having to pay the self-employment taxes on all net income. Talk to your accountant to see if this could be an advantage to you.

 

[imported_mirrorfinishman]

I get to keep all of the (gross) income.



Then, I get to pay all of the expenses incurred.



Then I really get to keep whatever (net) income might be left.



I operate as a sole proprietorship.



Jim

Jimmy Buffit is a smart business owner.