How should I pay myself?

Question

I own a small buisness and was just curious, for records reasons do i actually need to write me and my partner a check , or can I just spend the money right out the buisness account after I deposit it?

this is a sole proprietorship im allready paying taxes on the income then i have to tax myself again?

Answer 1

Hoo, doggies, you've got yourself a mess if you just start spending business money on yourself.

If you've got a corporation, you risk losing your limited-liability status (as the company might be construed as merely your alter ego) -- then, you can get sued personally despite having incorporated!

If you've got a partnership, you're setting yourself up for huge disputes over money.

In general, regardless of the business form, you're incurring a whole bunch of risks not the least of which is that your accounting is going to be a disaster. This results in such a mess from the government (federal and state) because it means that you are, inadvertently, committing all sorts of fraud (payroll taxes, income taxes....)

Get an accountant, preferably one who is also a lawyer and, thus, more likely to be bound (even in an accounting context) by attorney-client privilege.

Answer 2

Hello, have you ever heard of payroll taxes? You need to pay yourself and your partner and withhold federal, state and social security taxes and pay them to the government. If you spent the money right out of the business, you would be avoiding taxes, a/k/a tax fraud / tax evasion.

Answer 3

You should pay your self with a check so you can keep track of what you are spending.

Answer 4

get an accountant