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    11 Replies Latest reply on May 19, 2013 9:33 AM by Moderator Ilona

    Can you or do you 'pay yourself'?

    Moderator Ilona Ranger

      As a 'Small Business Owner' there are many things that need to be done to stay competitive and be successful. Have you had times where you could not or did not 'pay yourself'? If it happened to you, please tell us about those situations and maybe share some tips to prevent this situation from happening again and help other to avoid them all together.

       

      Ilona

        • Re: Can you or do you 'pay yourself'?
          libra713 Newbie

          My business partner and I contracted with Paychex to handle our HR and payroll needs. This has been a tremendous support for us to know that we are following all state and federal employment requirements and give ourselves a paycheck every other week.

           

          It is very easy as a business owner to forego your own needs to allow for the business itself. This can complicate your life come tax time when you find that you have a lot of catching up to do to remain compliant.

           

          Definitely we feel that using a third party payroll provider is an important and necessary part of the maintenance of a successful business no matter how small.

            • Re: Can you or do you 'pay yourself'?
              gaylortax Newbie

              Using a third party is a great solution, payroll is one of the top reasons businesses can fail - not paying the taxes can lead to serious problems (penalties & levies).  I recommend clients use a 3rd party service provider because of the ease of processing and allowing you to focus on your business.

               

              On the original question of paying yourself - it is critical to make sure that if you are a corporation for tax purposes, that you take a salary and not just take money in dribbles without having tax withholding as that can lead to problems as well.  I recommend reducing a payroll and then if you document the foregone salary you can make it up later.

            • Re: Can you or do you 'pay yourself'?
              Guide

              "Paying" yourself can mean many different things depending on the type of company you have. We have an LLC. We don't "pay" ourselves because we don't technically own the company. We get taxed on the income the company makes. We have tax write offs to off set the taxation on the income. We pay our utilities through the business. And the business owes us rent every month. These are the little things we do to get "payed". Because of the specific design of an LLC, we have never had the unfortunate circumstance of not being payed. Thank goodness.

              • Re: Can you or do you 'pay yourself'?
                Moderator Ilona Ranger

                Great tips everyone, thank you all. The sad thing is that many small business owners are out there not paying themselves just be able to make payroll, or just putting the money back into the business to keep it afloat.

                 

                Ilona

                • Re: Can you or do you 'pay yourself'?
                  pandoraj Adventurer

                  I have started my business yet but, I plan on paying myself. I have made several spreadsheets that accounts for the business taxes, personal pay check, income taxes, and sales taxes that must be paid at certain times of the year. I was going to go through a 3rd party payroll or accountant, however, I can do all those "fancy" things myself.

                  Good question! I know several small business owners that don't pay themselves either.

                  • Re: Can you or do you 'pay yourself'?
                    Moderator Ilona Ranger

                    We have seen it mostly in the restaurant business where owners put in 80-100 hours a week and do not pay themselves. Some even have a second job to make it through the month and have money to pay their private bills.

                     

                    Ilona

                    • Re: Can you or do you 'pay yourself'?
                      Moderator Ilona Ranger

                      Many times it is not so 'black and white', 'make money or just sell and get out' some of these businesses here have been around for many many years, most of there life's are connected to the business. In some instances their business and their homes are in the same building, giving up and selling out might not be possible for them in today's market. So many forgo their own paycheck to keep the business afloat and hope for a better future. Also, around here many of the businesses are owned by people 55+ for them starting over is hard and frightening.

                       

                      Ilona