How does a sole proprietor pay themselves running a small business?

Answer 1

A sole proprietor of a business does NOT pay himself, just like any other employee; rather, he writes himself a check and does not withhold payroll taxes.

Those checks he writes himself are called, "Owner's draws."

The journal entry for each check is, in effect, as follows:
Owner's Draw......$XXX.XX (debit)
Cash..................$XXX.XX (credit)

In a sole proprietorship, by definition, there is no split of profits with partners, as there are no partners, as there is no partnership, and there are no dividends paid to shareholders, as there are no shareholders, as there is no corporation. A sole proprietorship is a one-person-owned business.

Furthermore, I would highly suggest that the owner of the business NOT pay himself after paying all of the bills; rather, I suggest that he budget his income and expenses and pay himself, FIRST! My gosh! A business owner is in business to make money and to build personal wealth! Is he not?

Of course, business owners are obligated to pay employees, payroll taxes, sales taxes, income taxes, selling, general and administrative expenses, but, again, if they can't prioritize themselves, first, their businesses will not survive!

So, my friends, wisely charge ahead and live your dreams!

Phil
http://www.phillipfostercpa.com/accounting.html

Answer 2

You pay yourself just as you would any other employee. Although, you tend to take as little as you need, since you are the last one to get paid. At the end of the year, you can take a share of the profits, if there is any. good luck

Answer 3

They take a draw. If the business shows a profit, then the owner would take a bonus . The draw being the same as a paycheck.

Answer 4

They get what's left after paying the bill. If they're smart they'll take as little from the til as possible to start making a profit.

Answer 5

with just as much lack of integrity as one would expect... shows up a 11am,,, leaves work at 1:30 after an hour lunch. does nothing. destroys productivity by enlisting the entire company to perform personal household projects for him that yield nothing for the company, shows extreme favoritism, via promoting and doubling the salary of the one person scummy enough to support his lowball value of everyone else working there...

Answer 6

they split the profit from the money the made in one day and split it and either put it in the bank or pay it to dividends to shareholders.

Answer 7

THE SAME WAY YOU WOULD PAY AN EMPLOYEE, THE SAME WITH YOUR MEDICAL,DENTAL AND SO FORTH, AND ITS DEDUCTIONS COME TAX TIME ON LONG FORMS