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Paychecks! How soon do you plan on starting this online business??
Have you decided to be sole proprietor or a Corporation.
If it is just the two of you and you are a sole prop, you do not need payroll or a business account>
If you are going to be a Corp, Yes you then payroll and a business account.
Do you have an accountant??
Good luck, LUCKIEST
If don't have any employees, you don't have a payroll and don't need a payroll system. Even when you begin to hire people, you may find that having a payroll service through a local accountant is preferable to acquiring and running your own system.
I have to agree with Luckiest...if you're using any kind of bookkeeping system (Peachtree, Quicken for Business, QuickBooks) you can make Payroll entries through a General Journal Entry if you don't have the Payroll system activated--the net effect is the same--tracking the withholdings and taxes and matching taxes is the key point. Whether or not you have employees, writing a check to yourself out of the business account to reimburse expenses laid out for the business is perfectly legal, just keep the receipts to turn over to the business, and by extension your accountant.
Just checking in. Have you made an decisions yet??
You will be taking a lot of things as 'corporate distributions' which will transfer to your 1040. It would be advisable to pay yourselves as small salry and make tax deposits each month. (Thats how my accountant has me set up).
I agree with DomainDiva, it makes a whole lot of sense to pay yourself a little and tax out the taxes rather than distributions. When I first started my business I was paying myself just $150 a week and taking taxes out of that. It just made this easier according to my accountant than taking distributions. He did the tax calculations for me once and then I knew what to take out going forward. Eventually when I first hired an employee, I switched to a payroll service.
I totally agree with LT Lawn Care. Also, there are so many other steps to take before concerning yourself with a Pre-set up Pay Check system for employees that you don't even have yet.
(From Jamila with Y-Not Magazine)
Definitely pay yourself a little something and pay taxes rather than taking a distribution. Makes more sense than random distributions anyway and will prepare you for the time when you'll actually have to pay employees other than yourself.