I am a Business Owner, how Should I Pay Myself?
$69.99 7 Sections 7 Lessons
Course Description
I am a business owner. Should I set myself up on payroll? Should I pay myself through a draw? Should I pay myself through a distribution? Should I set up a guaranteed payment system to pay myself? All of these options can confuse the best of us. As a small business owner, how many times have you wondered if you are paying yourself per IRS requirements? This class explains how owners of the most common types of businesses in the United States are required by law to pay themselves. Getting it wrong can cost you and your business a lot of money in penalties and interest.
Course Content
Introduction: I am a business owner, how should I pay myself?
This class is only for individuals who own a business in the United States. One of the most frequently asked questions from some of my beauty professional clients is how they are supposed to pay themselves. My answer is always “it depends.” It really does depend on your legal business structure. This class breaks down how each of the most common business structures is required to pay its owners.
Introduction: I am a business owner, how should I pay myself?
Sole proprietorships
Sole proprietors are considered self-employed and not employees of the business. They cannot pay themselves wages, have income tax, social security tax, or Medicare tax deducted from their pay, or receive a Form W-2 from their sole proprietorship.
Sole proprietorships
Single member LLCs
Single Member LLCs are considered disregarded entities by the IRS, and therefore, they are treated the exact same way the IRS treats sole proprietors. The Soleproprietor lesson of this course goes into more detail.
Single member LLCs
Partnerships
A partnership does not pay income tax at the partnership level; instead, the profits pass through to the partners. A partnership files Form 1065 and Schedule K-1 for each partner. Partners in a partnership can pay themselves through an owner's draw and/or guaranteed payments.
Partnerships
Multi-member LLCs
Multi-Member LLCs are treated as partnerships by the IRS, and therefore, members are required to pay themselves the same way a partner in a partnership pays themselves. The Partnerships lesson of this course goes into more detail.
Multi-member LLCs
S corporations
S corporation shareholders/owners are required to pay themselves a salary. Shareholders/owners can receive income from the net profits of the business. This lesson explains in detail how S corporation shareholders/owners are required to pay themselves.
S corporations
C corporations
C corporation shareholders/owners are required to pay themselves a salary, and shareholders/owners can also pay themselves a dividend.
C corporations