PAYING YOURSELF?

[Mowman]

How do you one man shows pay yourself? Do you write yourself a check each week? Or do you do it another way? Do you pay your other bills out of your Lawn Care Account? Like house payments and other bills that you have. Thanks for your input.
Mowman

[RYAN]

I pay myself a set amount weekly and at the end of the month I reimburse myself for things I paid for with my personal account. ( Truck, gas, postage, office supplies)

[Dusty]

More years ago than I care to remember, I dated a woman that worked for the IRS. One of the things she told me to be careful about in my business was co-mingling of moneys. I was told not to mix business affairs with personal affairs. To do so opens Pandora's Box when you get audited. Every payment to others is suspect whether it is a business expense or personal. She taught me other things, but that is not part of the discussion!!!!

[SJR Lawncare]

I have a business checking account, and I have a personal account. Each week I write myself a check from my business and deposit it in my personal account. It has worked well for me.

SJR

[jrblawncare]

Dusty,sounds like you had some good "hands on" training.I have two business accounts..checking and savings.I will write myself a check when needed over to my personal account to help with home bills.The business savings I try to leave alone for up grades to the business.John

[Randy Scott]

Her name wasn't Pandora was it?

[Dusty]

I deposit all incoming funds into the savings account and allow it to collect interest until I need it. When I write checks, I transfer to the checking account to cover the checks that I have just written. I keep just enough in the checking account to make sure that it doesn't incur service fees. If for any reason I make a mistake in the bookkeeping, the bank will automatically transfer money from saving to checking and will not bounce a check or charge any fee. I have to keep a $5000 average balance in checking to a not incur fees. It is easy to do once you train yourself to deposit frequently and write checks only on the 15th & 30th of the month. That way you have everyone paid on time and have the use of the money for the longest period. Don't forget to take all cash discounts for fast payment when offered.

[Dusty]

In the year or so that we went out, I learned a lot of things. One was never lie to a government agent! I also learned how "criminal investigations" within the IRS work. You don't want to ever get caught up into one. Even if you win, you lose in the end, considering the expense and aggravation. Keep good records and always document the check that you write to an individual with their name, address, telephone number, and if possible, their Social Security number and/or birth date. With this information you can prove that the check was written to an actual person & not used to divert money back to yourself. Always tell the person that they should cash the check themselves, and never cash it for them. To do so, casts a shadow of suspicion on you. By the way, her name was ******.

[Skookum]

I have a business checking and savings account seperate from our personal accounts. I do not actually pay myself any rigid amount. I just float money out of the business savings to our personal accounts as needed. I try to never write business checks for personal items.

[thefarmer4]

I've been told by the accountant and insurance agent write myself and my partner a regular paycheck. This is to prove that we have some personal income if we ever have to collect disability insurance. This is because its based on you income and if you go off your taxes that might not show any income. Also you have to show income to put money away in a IRA.

Hope this helps.

[bababooie]

i'm in a s-corporation,so i guess im ok writing all my bus check for my personal stuff,i.e. house, food,utilities etc.is this right?

[CCLC]

We have a checking account for the payroll, a checking acount for the general business, and we have all of our personal accounts. My wife gets a set amount every week to pay our personal expenses. This has worked out the best for us.

[Dusty]

It doesn't matter what type of corporation you are. A "S" corporation just means that the profits flow to you with out being taxed first. I would still keep things separate. It is easy enough to get into trouble and mixing personal and business just makes it that much harder to explain later if you have to. A good paper trail is better than your memory 3 or 4 years down the road.

[zimm4]

Theres 2 things you have to do. Death and taxes.
Pay the irs and pay your employees and suppliers.

Kyle

[kutnkru]

I have always been told that unless you are an LLC company or Incorporated that it doesnt matter what you pay yourself for payroll. You will still have to personally pay taxes on the entire loot otherwise. They said that as a DBA that every penny we generate as a company is considered MY personal income and a salary doesnt mean diddley, because come tax time I still have to pay taxes on whats left after deductions. Whereas by being incorporated or otherwise I can show a profit for the company after my meazley salary, and deductions.

Kris

[TJLC]

I have a business checking and business savings acct. I also have a personal checking acct. When I get checks I put what I feel I need in my business checking and the rest in my business savings. If my business checking runs low, I just use my personal account. My wife's checks go in the personal checking account, so there's usually enough to cover me. Works for me.

[Dusty]

When you put your personal money into your business checking account, the IRS considers this a loan and you have to pay yourself interest, just as if you had taken a loan from the bank. Once again, it is best to keep an exact paper trail and issue a interest bearing note to yourself for the money that you loan the business (assuming that yours is a corporation). If the corporation should go bankrupt, you are treated as just another creditor. You don't have the right to take your money out first. Something to think about. If you are not generating enough income in the corporation, you are best to be owed salary, than to take the salary and loan the money back to the corporation. In a bankruptcy, wages are next to be paid after taxes, and then the creditors. For more details, check with your attorney or tax advisor (disclaimer).

[bababooie]

if i take money from my bus. acct. and write a check and deposit it to my personal acct,would'nt that look like im paying myself, so would i have to treat it like a payroll check?how do you go about taking $$ from the bus.acct. to personal without this problem or is it a problem. thanks

[double e]

I pay myself weekly in the busy season months- and when needed in the slacker months. Sometimes I'll buy a big piece of equip. and slow up on my pay checks.

[thefarmer4]

bababooie,

You don't have to make it a payroll check but you can if you want to. Then you would have to have disability, workers comp and pay into SS and State/Federal taxes each week. At the end of the year file your deductions on you taxes and then you probaly wouldn't owe anything.
We don't do it as a payroll check. We just write ourselves a check from the bus. acct to ourselves. Its your money to do with what you please. At the end of the year you file your taxes and nowhere on there will it show that you wrote a check to yourself.

[bobbygedd]

my acountant told me, the only way u take money out of the business actt is in the form of a paycheck written to yourself, and the apropriate deductions need to be removed, just like when u get paid by your employer. other than that he said u can borrow money from the business, but u have to pay it back, and make sure to photo copy every transaction. BOB

[jeffyr]

Okay.....I see what you are saying as far as declared income. But it seems things are made more complicated by writing a check from the biz account weekly. Like the farmer said, it won't show anywhere on your income taxes that you wrote a check or just claimed the income.
I was using a business acount and keeping everything separate until I got fed up with the bank charges so now I do it all through 1 account. Now I am part time with another job, so I don't have to show "income" for things like a loan or for disabilaty, so I may be speaking out of ignorance. The bank has not complained of my check depositing volume so I don't see a need to change right now.

jeffyr

[JML]

if you pay into unemployement when you cut yourself a paycheck, will you also be able to lay yourself of in the winter and collect unemployment. can you do the same for a family member.

[thefarmer4]

bobbygedd

That would be true if you were incorperated but it is not true if you are a sole propriater. You can file and pay all of your taxes at the end of the year. Its voluntary to make weekly tax deductions unless you have had problems with the IRS in the past.

JML

Family Member on the books -YES
You - Probably not
If your incorperated - Maybe
Talk to a good Accountant

Jeffyr

The others have a point as far as keeping things seperate when it becomes Audit Time. But if you don't have a very large business it probably isn't too bad.

[JML]

i would think you could do so. because what about the presidents of large corps. they don't do it for free. i'll have to ask my accountant.

[cclllc]

I have my business set up as an LLC.You get a better tax rate that way and it is harder for people to sue your personal assets with an llc.My accountant told me that if I paid myself that I need to write on the check Guaranteed payment to partner.Of course this means you,your wife if she is a partner,and anyone else.Hope this helps.john