Posted by TLR_KY on 1/30/06 4:58pm
Msg #92433

Paycheck to yourself

This may sound like a silly question to ask but I just was curious as to how everyone else paid themselves. My wife and I are trying something new this year. We are starting out by instead of paying a salary we are just paying expenses that we incur during the month. We are both employed full time so we don't have to look to signings as our primary income. For the last couple of years we paid salaries and of course used all the write offs like normal. What is everyone else doing? Are there any NSA's out there who are a husband and wife team and if so how do you pay each other. What are the thoughts?

Reply by Mike_NJ on 1/30/06 5:27pm
Msg #92438

I'm set up as a LLC, I lend my corporation money ex: 40K loan (start -up and expense's) I then make monthly payments back to the loan(non taxable). In the years I've been doing this on the books I have lost a large amount of money and still have not paid myself a salary to date. If business were much better I would take a salary and claim it as a business expense (down side as a business is paying taxes twice)

Reply by Mindy_WA on 1/31/06 1:10am
Msg #92514

My husband & I are full time SA's. This last year, we operated our Sole Proprietorship in this fashion. We set up a business free checking account (in case we get any paychecks with the business name on them) and use it for business expenses only. All business money gets run through this account. We keep track of milage and I cut us a check for the reimbursement of that before I pay us ANY wages. After that, I will pay us a salary (just to move the money to our personal account). I prefer to keep the business separate from our personal just so it's clear, however, according to the accountants I have consulted with, any and all money in a sole proprietorship counts on your personal income tax...whether you keep it in the business, or take it as wages.

The long and the short...either way you choose, you will still have to pay income tax. Just do whatever works for you!