Virtual Assistant Forums | Work from Home

kimbeckers · #1 (**permalink**) 07-23-2008

I am not sure that I am putting this thread in the correct spot if it is in the wrong spot please feel free to move it.

I am just wondering how most of you are paying yourselves from your business meaning do you cut yourself a check or do you cut yourself a payroll check and withhold taxes.

I would love your feedback on what other VA's are doing and why.

Last year when I was running my business I was cutting myself a payroll check and taking out taxes but I am wondering if this is the best way to do it or if there is another way. Some people have suggested to me that I can cut a check without taking taxes out but I am not sure how I feel about this. My accountant said I could do it either way depending on how much money I am making. Last year wasnt really any issue because I just started out and did not make much net profit but I am hoping to make a profit now and take payment in one form or another.

Thanks for your input.

Kim

Office Goddess · #2 (**permalink**) 07-23-2008

As an llc, all income is considered personal. I simply write myself a check since I will be paying taxes on all net income anyway.

kimbeckers · #3 (**permalink**) 07-23-2008

Hmm, I am actually an S corp do you know how that effects me? I am a bit confused about this as I would prefer to do as you are doing and write myself a check because in the end my business return gets filled for my S corp gets filed onto my personal return. I would rather not have to pay payroll tax every quarter. I cannot seem to get a definitive answer from my accountant.

Kim

Rebecka Melson · #4 (**permalink**) 07-23-2008

If you are a corporation you should be paying yourself a reasonable salary and withholding payroll taxes. Any other monies you take from the corporation can be taken as a distribution from the corporation without payroll taxes.

I am a single-member LLC and therefore just pay myself a draw from the company, without payroll withholding. I just pay self-employment taxes on my net income.

Administrative Partners · #5 (**permalink**) 07-23-2008

I think most of us are LLC. So I also just use the money as needed, however, since I have a full time job, I am putting the earned money back into the business.

VBP · #6 (**permalink**) 07-23-2008

I am a sole proprietor so my income and salary draws are all personal. I don't withhold any taxes either...I just make sure that I have lots and lots of deductions! :-)

#7 (**permalink**) 09-29-2008

I read somewhere that you could elect corporate taxation for your LLC. (not sure about sole) If I were to do that, once ive paid my companies taxes the rest of the money is for me to do with as I please right? As long as I reinvest so that everything is covered?