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take pay check (owners)

Discussion in 'Business Operations' started by smarino21, Apr 23, 2006.

  1. smarino21

    smarino21 LawnSite Senior Member
    Messages: 345

    As for you owners, do you guys take paychecks on a weekly basis. If so do you do it through a payroll comp or just outa your check book. Or do you kinda take big chunks as you make them?
  2. smarino21

    smarino21 LawnSite Senior Member
    Messages: 345

    i thought about just paying my self like 10$ per hour when ever working on my business. Last year i just would leave it all in the busss and then would take what i needed, then ended up buyin things i dont need? Which is best (im 18 the bills i have are business bills)
  3. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    I pay myself a k once a month.

    Simple, easy.

    Yeah it takes some budgeting and it hurts at first but in the end it's a lot less paperwork, less checks to write, less running by the bank (if both my personal and business bank see me more than 5 or 6 times in a month combined, I'm doing something wrong)... I make one deposit a week, and write myself a check once / month.

    Salary keeps me from having to track hours, too much of a pita. Also the taxes stay the same so long I pay myself the same, less wondering what the next amount due is going to be.
  4. NEPSJay

    NEPSJay LawnSite Senior Member
    Messages: 492

    i pay myself minimum wage.
  5. Badgerz

    Badgerz LawnSite Member
    Messages: 122

  6. Badgerz

    Badgerz LawnSite Member
    Messages: 122

    What do you do if you want to say, put a down payment on a car and your personal account is short but you have plenty in your business account? Do you just take what you need if and when you need it?
  7. NEPSJay

    NEPSJay LawnSite Senior Member
    Messages: 492

    no, it doesnt work that way. there are ways to write off stuff like that.
  8. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,872

    First off, how you pay yourself totally depends on how you are set up as a business entity.

    If you are a sole proprietor, then it really doesn't matter how you pay yourself. You can pay for personal stuff with your business checks and pay for business stuff with your personal checks. You can write yourself checks any time you want, cash business checks and keep the cash, and withdraw cash from the business account and use it for any purpose. You have absolute freedom to do what you want with all your money - be it business or personal money. The business is not distinguished from the personal. As far as the goverment is concerned, you and your business are the same. So in this setting, it makes no difference at all how or when you pay yourself.

    But if your business is a separate entity (e.g. a Corporation) then how you pay yourself is VERY different.

    If you don't pay yourself within the exact legal parameters, you might as well just go back to being a sole proprietor. Because the whole reason for setting up a separate entity is to separate yourself from your business for liability reasons. Common example; someone sues you because your employee ran over and killed their kid with your company truck. So if you are a corporation and this happens, they can only go after corporate assets. You still keep your own personal assets (house, personal cars, toys, etc.). But this protection only exists if you are really keeping your company SEPARATE from your personal finances. If you are ever taken to court, the very first thing the prosecution is going to do is subpoena all of your personal and company accounting, bank statements, deposits, etc. And they are searching for ANYTHING that would allow them to "pierce the corporate veil". That is, they want to prove you were not keeping things separate, like you were supposed to have been. If they are successful, you lose everything. So it's critically important that you do things by the books, financially speaking.

    There are two separate issues here. The first is HOW you pay yourself. The second is WHEN you pay yourself.


    If your business is a separate entity, then you have basically three methods of paying yourself. First is a regular paycheck. Even if you are the founder and CEO and President, you are still considered just an employee of the company. And as an employee, you get a regular paycheck.

    Your second form of pay is called "distributions". That is, as founder, owner, etc. you are allowed to share in the company profits. You can "distribute" this money to you, as long as it is properly recorded in your books as such. See your accountant for more details.

    The third way you can pay yourself is via reimbursements. You can reimburse any employee - but namely yourself - for business expenses that you paid for personally. Note: This isn't income. You don't get taxed on it. It's simply the company reimbursing you for stuff you paid for. Again, not income.


    When you pay yourself doesn't matter too much really. You can write yourself a paycheck every day if you wish. Just record it properly, take out the proper withholding tax, etc. It's not usually done this often. But nothing legally wrong with paying yourself more often than you pay the others.

    Typically, though, you'd just write yourself checks and take these checks as a "draw" from your paycheck. Then make a regular paycheck every week or every two weeks, when you pay your other employees. If it's just you, maybe still a good idea to set up a regular pay day. In between those paydays, you just take draws.

    You can write yourself distribution checks any time. Usually, distribution checks don't have any witholding tax taken out. They are simply checks written out to you and recorded as distributions. But just because there aren't any taxes taken out, doesn't mean they aren't taxable. You still have to pay tax at the end of the quarter or at least at the end of the year on this income. So be careful!

    You can also write yourself reimbursement checks whenever needed too. I usually save up receipts for quite a while and then finally reimburse myself when I have several of them. You record this in Quickbooks as a journal entry. Again, see your accountant for more info.

    So that's the low-down on how and when to pay yourself. To summarize; if you are a sole-prop. don't worry about it. Pay yourself whenever and however you feel. But if you are another entity, especially a corporation, then you need to be more careful.
  9. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    I take a paycheck once a month...it is a % of our net profit which under our P&L it shows as an Other Expense.
  10. DadsLawnCareInc

    DadsLawnCareInc LawnSite Member
    Messages: 13

    My business is incorporated; Therefore, as I am the CEO of the company. The Company that I own pays me a weekly salary. Dividends are paid to the stock holders (ME) every 3 years. I’ve been in business for 2 years therefore no dividends have been paid at this time. Good Luck, T.M. --P.S. I use direct deposit. My Employees (ME & 2 Sons) appreciate it. My Boss is a Great Guy.

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