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How do I pay myself as a business owner? This is a question I get a lot from small business owners. Well, It all depends on the business structure you have, which will determine how you’ll pay yourself.
If you are an LLC, sole proprietor, or partnership you will simply do an Owner’s Draw from the business. Let me explain! Once you have determined how much to pay yourself you will simply transfer that dollar amount from your business checking account to your personal checking account. Then record that transaction in your accounting platform as a decrease in cash and increase in Owner’s Draw equity account.
If you are an S-Corp or C-Corp you will need to be on payroll. Let me break it down for you! You need to determine your salary, then find a payroll provider to set you up. They will need to know your pay period frequency and payroll amount so taxes can be withheld for your respective state. Be mindful the IRS requires the salary you decide must be “reasonable” as it relates to your business.
Leave a comment below if you need a great payroll provider.