Small Business Tax Savings Podcast
Business:Entrepreneurship
Send us a Text Message.
It is important to pay yourself as an owner, but sometimes the process can be messy and confusing. There are a variety of options available, depending on the type of business entity you have. Certain payroll deductions will reduce your business income, but guaranteed payments are unaffected by profit or loss. In this episode, Mike discusses ways to pay yourself from your business and what requirements must be met to do so. He also dives into how to save money on taxes through proper accounting and salary deductions.
[00:00] How to Pay Yourself as a Business Owner: An Overview
· An owner's draw is not considered a business expense and therefore does not reduce your business profit.
· Payroll requires doing payroll tax withholdings, form filings, and making payments to various government agencies.
· Payroll is a business expense that reduces your business income.
[04:11] Owner's Draw, Guaranteed Payment, or Dividend
· Paying yourself as an owner via payroll is an expense to your business, but it's gonna be reported on your tax return as income.
· A dividend is a rarer way to pay yourself as a business owner and it's similar to an owner's draw distribution but oftentimes requires some extra year-end paperwork.
· With a sole proprietorship or single-member LLC, paying yourself via an owner's draw is the simplest way to do it
[11:49] How to Pay Yourself Before Year End
• If you're operating as a sole proprietorship or single-member LLC, you'll pay yourself with an owner's draw or distribution.
• If you're operating as a partnership, you'll pay yourself as an owner's draw and/or guaranteed payment.
• If you're operating as an S corporation, you'll pay yourself with both distribution and payroll.
[16:00] Strategies for Saving on Taxes
• Some strategies include paying yourself a reasonable salary, taking a salary from your business, and running an S corporation correctly.
Key Quotes
“Always remember with a pass-through entity, you are taxed on the profit of your business regardless of how much money you leave in or take out of that.” – Mike Jesowshek
Resources Mentioned
● Accounting software: https://gusto.com/
● Bookkeeping blog article: https://taxsavingspodcast.com/bookkeeping.
--------
Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings Podcast
Join Our Tax Minimization Program: https://www.taxsavingspodcast.com/tax
IncSight Packages: https://incsight.net/pricing/
Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale
-------
Podcast Website: https://www.TaxSavingsPodcast.com
Facebook Group: https://www.facebook.com/groups/taxsavings/
--------
To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: Ask@TaxSavingsPodcast.com
Coronavirus (COVID-19) - Employee Retention Tax Credit
Coronavirus (COVID-19) - Relief Options Summary
Coronavirus - CARES Act - Checks, Charity, and NOLs
Coronavirus - COVID-19 Government Loan Options Update (EIDL vs PPP)
Coronavirus - Government Loan Options (May Be Forgiven)
Coronavirus - Planning and Expense Cutting
Coronavirus - Embrace The Situation and Be A Leader
Tax Issues? What You Need to Know About Tax Resolution
2019 Tax Due Dates and 2020 Tax Guide
Are various income types taxed differently?
High End Tax Strategies (w/ Special Guest Alex Sonkin)
Per Diem for Employees
Per Diem for Business Owners
Charitable Giving - Personally or Through a Business?
Does No 1099 Mean No Deduction?
Bank Account Empty but Still Showing a Profit - Why?
Sales Tax - What do I need to know?
Tax Due Dates and Podcast Changes
Great Changes for 2020 and Thank You!
Gather W9s and Make Tax Season Stress Free
Create your
podcast in
minutes
It is Free
The emPOWERed Half Hour
Make Me Smart
Tax Chats
WSJ Your Money Briefing
NerdWallet’s Smart Money Podcast
The Indicator from Planet Money