Many business owners ask when they’re starting out, “How do I pay myself?” This depends on what type of company you chose when registering your business.

If you have a Sole Prop or Single Member LLC, there is no set schedule or amount required. You pay yourself what you choose. This can be done by writing a check to yourself from your business bank account or transferring the money directly to your personal account. It shouldn’t be done in cash because there should be a paper trail showing where the company money is going. When it shows up in your bank feed, it should be logged as Owner Draw/Distribution (or Owner’s Pay & Expenses). You can do the same if you’re part of a Partnership.

If you chose to incorporate right away, this likely requires that you pay yourself a “reasonable” salary, which means you are paid through payroll just like your employees.

Make sure to consult a certified tax professional for any tax-related questions.

#bookkeeping #smallbusiness #tipsandtricks #rockelbookkeeping