PDA

View Full Version : How much do you pay yourself?


JFGLN
11-12-2006, 02:42 PM
This question is mostly directed at LCO's set up as S Corps. My partner and I are considered to be employees of the corp, so we draw a monthly salary. Money left over after all expenses and payroll, (profit) is paid out to the parters at the end of the year.

So my question is, What is a reasonable salary to pay yourself?

Az Gardener
11-12-2006, 03:05 PM
According to IRS rules you are supposed to pay yourself what you would make doing the same job as an employee for another company. Taking into consideration your market and number of employees etc. That is what my tax guy has advised me. It will be different from one region and company size to another.

YardPro
11-12-2006, 08:12 PM
as much as the business can afford.

topsites
11-12-2006, 11:43 PM
I got tired of the salary routine this year.

That would be Gross - (overhead + cost + salary) = profit
Always the quarterly 941's and state and futa and social security payments =
4 envelopes + 4 checks + 4 forms (4 charts with percents to figure) and make sure you get the correct check + form in each envelope or you WILL end up owing one department money while another one will have this credit (yes they WILL cash your check regardless of what dep't you sent it to) and you get letters over missing paperwork and wrong paperwork, and do this every quarter, do NOT make a mistake.
Of course, you can show as little as $100 profit for the year and the IRS will bother you little.

Now I do gross - expenses = profit.
Quarterly 1040ES + 740ES, 2 checks, 2 envelopes.
Two charts to figure % (saves calculator wear lol).

It's more taxes the second method (profit taxes are higher than salary by a thousand or more / year) but no more constant headaches, what is left after paying taxes (the profit) is mine to do with as I wish so I can buy equipment or a new car but really I have to pay myself... Anyway, social sec. gets paid automatically and no FUTA. But, you need to show thousands in profit (10k+), at least as much as you made before via the other method.

Because it's CHEAPER to cut grass than do taxes!

Oh yes, that would be an LLC registered as a sole proprietorship.
WOoot!

JFGLN
11-13-2006, 10:50 PM
This is our first year set up as an S corp. We already had a bookkeeper that did our invoicing, state taxes and payroll, so it isn't that much more work for her to keep track of the federal taxes.

SodKing
11-13-2006, 10:57 PM
two words...payroll service.

crab
11-13-2006, 11:03 PM
id say $ 20000 a month is a good base figure!

Josh.S
11-13-2006, 11:41 PM
$200 per/week all year around... but all of that income is disposable... I just choose to pay myself little to put more into the business..

topsites
11-14-2006, 01:46 AM
id say $ 20000 a month is a good base figure!

Yeah, for starters.

JFGLN
11-14-2006, 11:35 AM
Quote:
Originally Posted by crab
id say $ 20000 a month is a good base figure!

Yeah, for starters.


Hmmm, 20,000 a month? That would be a lot of lawn mowing!

Proscapez LLC
11-14-2006, 12:29 PM
I havent paid myself in the last 2 years, I just keep buying equipment that I need.
But then again the wife has a great job. lol

I can't afford to be on the payroll with the 15% SS and Medicare.
But they'll catch up to me when I get all the equpiment I need or my 3 years are up.

Maitland Man
11-16-2006, 11:59 PM
I can't afford to be on the payroll with the 15% SS and Medicare.
But they'll catch up to me when I get all the equpiment I need or my 3 years are up.:nono:

...ss and medicare are necessities to me for the future... like insurance and profits are to me today. Pay yourself something through the business, even if it's a small amount. The equipment you are rushing to buy today won't give you the hoverround or electric wheechair with the iv holders that you'll need forty years from now.

My dimes worth.

Dennis

Mr. Vern
11-17-2006, 01:21 AM
:nono:

...ss and medicare are necessities to me for the future... like insurance and profits are to me today. Pay yourself something through the business, even if it's a small amount. The equipment you are rushing to buy today won't give you the hoverround or electric wheechair with the iv holders that you'll need forty years from now.

My dimes worth.

Dennis
Do you honestly think that SS and Medicare will? If you can shelter money you are paing into those two accounts and put it in a very poor investment you will be mega dollars ahead in 40 years. If you screw up and invest it well, you will be even further ahead!

lawnMaster5000
11-17-2006, 01:39 AM
I get paid out of company earnings. Idealy on average i would make $40/hour for time worked. This year so far it is working out to be about $18/hr after all costs are paid and depreciation.

rodfather
11-17-2006, 07:18 AM
I pay myself a % of the gross revenue each month

RICHIE K
11-18-2006, 07:18 AM
Im with ROD FATHER on that

YardPro
11-18-2006, 08:54 AM
good idea rod... that way your salary is a set % of sales....

muddstopper
11-18-2006, 10:34 AM
I know my situation is unusal, but I cant draw a paycheck from my corporation. I Havent paid SS since 1976 as i am part of a more healthier retirement system. My problems stem from breaking my retirement system connection by paying myself a salary that is subject to SS taxes. For this reason I only draw dividend checks as a shareholder of the company. My wife, can and does take a salary paycheck of $300 per week and is listed as a 51% shareholder for Minority business reasons. All monies over operating cost are placed in a money market account to draw interest, (currently 5%), and dividends are paid at the end of the year.

Mr. Vern
11-18-2006, 09:22 PM
I know my situation is unusal, but I cant draw a paycheck from my corporation. I Havent paid SS since 1976 as i am part of a more healthier retirement system. My problems stem from breaking my retirement system connection by paying myself a salary that is subject to SS taxes. For this reason I only draw dividend checks as a shareholder of the company. My wife, can and does take a salary paycheck of $300 per week and is listed as a 51% shareholder for Minority business reasons. All monies over operating cost are placed in a money market account to draw interest, (currently 5%), and dividends are paid at the end of the year.
Sounds like you have no choice, but the problem with paying it all in dividends is that it gets double taxed. That is why we work the salary and the dividends to minimize the total tax situation. We also have a ton of corporate owned properties and recreation vehicles, etc...
Gotta study the laws and make sure you understand them well enough to LEGALLY minimize your tax burden - takes more effort than running the companies at times.