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Old 08-23-2016, 01:29 PM
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How pay myself

I started a small business as a sole proprietor and I need to know how pay myself? the money will be a separate account from my personal the account is just for the incomes but I need to know how pay myself and if depend the how much pay me will apply taxes?

thanks,



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Old 08-24-2016, 11:24 AM
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I started a small business as a sole proprietor and I need to know how pay myself? =====> As a SP, you need to file return aslongas the amount on SCh C of 1040 line 29/ 31 is $400 or more than $400; also you need to pay self employment taxes aslongas the amount on line 2/ 3 on Sch SE is $400 or more than $400.Also, you generally have to make estimated tax payments if they expect to owe tax of $1K or more when your return is filed; however, You don?t have to pay estimated tax for the current year if you had no tax liability for the prior year; You were a U.S. citizen or resident for the whole year; Your prior tax year covered a 12-month period.


the money will be a separate account from my personal the account is just for the incomes but I need to know how pay myself and if depend the how much pay me will apply taxes?====> You can't take the money out if there isn't extra money to take. Your business still has to pay tax on the net income of the business. You still must pay self-employment tax on the net income of the business. As a sole proprietor, you can take money out of the business at any time, and you don't have to pay tax on what you take out. As a sole proprietor, you are a business owner, soYou don't receive a paycheck and you won't find your owner salary on your Sch C.
If you need money for personal living expenses, you take what's called a "draw" from the business.
The draw is usually in the form of a check, written to you personally on a business check. But this check is NOT a paycheck. No federal income tax, state income tax, or FICA taxes (Social Security/Medicare) are withheld from this check. For example, If you put your own money into the business, you can draw it out to pay yourself back.You can also increase your capital account by making a profit. The profit goes into your capital account. So, if your revenues exceed your expenses this month by $3k, you can draw out all or some of that $3k for your personal expenses.If you don't have any money in your capital account, you can't draw any money out for personal expenses. For example, if you start a new business and you have little income and lots of money that must be paid out for rent, equipment, interest on your business loan , there is nothing left to pay you for personal expenses. You (personally and business) don't get taxed on the money you draw out for personal use. Your business tax amount is determined by the net income on the Sch C you complete each year. That Sch C income is put into your personal 1040 tax return and is taxed along with other sources of income.



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