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How should I pay myself?

tlipari

LawnSite Member
Location
s.east michigan
I know this may sound dumb, but what's the best way to pay myself? I've had those tell me to cut myself a paycheck every week but how should I work that with taxes? If I cut myself a check do I deduct the taxes like I do my employees? Do I just go off what I paid in taxes last year and make sure at least that amount is set aside? I have a call in to a CPA....just curious how all of you handled that when you first started up?
 

topsites

LawnSite Fanatic
Everyone does it different, but afaik there are 2 basic methods:

1) Treat yourself as an employee and pay yourself a salary (trust me it's way easier than hourly to track), do a slew of never ending tax paperwork and save about 1-2g / year or so. This method roughly adds out to 'Gross - (expenses + labor) = net profit' (and you have to pay taxes on the profit but in this scenario, $100 is a profit).
2) Do it the gross - expenses = profit way, pay the taxes on the profit and the rest is yours to do with as you please, thou in this case you'll want to show a profit somewhere in excess of 10,000 / year before too long (at least into your 2nd-3rd year) and you'll spend around 3-4g / year on taxes, maybe more.

One way involves a ton more paperwork, the other costs more money.
 

Nathan Robinson

LawnSite Senior Member
Location
47712
I tried sending you a personal message but it didnt give me that option when I clicked on your profile. Message me and I will show you how I set paying myself up. Nathan
 
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