If you are new to owning your own business, it can be a leap of faith at times. Many people open their own business without knowing how they are going to do things like pay themselves. It may sound like something that is easy enough, but it can be quite complicated, especially for those that own a small business. Mark Dicus & Company is here to talk about a couple different options available to make sure you are getting paid when you own your own business.
Is it Better to Pay Yourself a Salary?
When you decide to pay yourself a salary from your business, it is going to be a lot like it would be if you were getting a paycheck from an employer. You will have the stability of getting a paycheck on a schedule that you can plan on. When you choose to pay yourself this way, the taxes that you will owe will also come out of your paycheck automatically. However, some people don’t like the lack of flexibility that comes with this form of paycheck. This leads us to the next way that you can pay yourself. The salary method of payment usually works best with S corporations and C corporations.
Does an Owner’s Draw Count as Income?
For a more flexible way of paying yourself, you can do it with an owner’s draw. You can take money out of your business’s profit on an as-needed basis. You will need to pay your taxes upfront every time with this method of payment. Some people don’t like the lack of an upfront tax deduction. This method requires more diligence and saving to ensure you have the money needed to pay your taxes come tax time. There is a benefit to paying yourself based on the performance of your company too though. The owner’s draw method usually works best for sole proprietorships, partnerships and limited liability companies.
How Do Business Owners Decide what to Pay Themselves?
You need to take several things into consideration when you are determining how much to pay yourself as a business owner. This is going to look different for everyone as no business is like the other. But here are some things that you should think about.
– How well is your business performing?
– What do business growth projections look like?
– What do your personal expenses look like?
Bookkeepers, Accountants, Tax Advisors & More in Summerlin, North LV, Henderson, Lone Mountain Village & Greater Las Vegas, Nevada
It’s important to remember when you’re trying to decide which method of paying yourself is going to be the best fit, there is no one size fits all situation here. You need to take a good look at your business and how well it is doing to make that decision. You should also consider the type of business you have to help make the best decision as well. At Mark Dicus & Company, we can help you get these decisions made with our new business advising services. It is our goal to make sure you have a successful business. Call us today!