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Salary or Draw? How to Pay Yourself as Business Owner

Congratulations! Your small business has moved beyond the initial startup phase and is now a profitable venture. Although you may have worked for free in the early days, it’s time to pay yourself for your efforts. You generally have two options for taking home a paycheck: a salary and/or a draw based on the structure of your business.

Your Payday

If you are an officer in a corporation, the law says you must be on the payroll and receive regular checks that include withholdings for Social Security, Medicare, federal income taxes, and state income taxes in states that require them. If your company is legally structured as an S Corporation, you must receive regular paychecks with those same withholdings, but you also have the option of taking additional money beyond your salary in the form of a draw or distribution. Checks for draws and distributions are written without withholding the taxes that are taken out of a regular payroll check. So, how do you decide how much to take as a salary and how much to take as a draw?

Reasonable Compensation

End-of-the-Year Checklist for Small Businesses

The end of the year is a busy time for a whole host of reasons. Holidays, travel plans and family visits keep us all running ragged from November through January 1. But as a small business owner, there’s even more you have to handle at the end of the year. Right now is the time of year when your business really needs your attention, especially in regard to accounting, IT and end-of-year administrative tasks. Doing so not only helps you close out the current year on a high note, but it also sets you up for starting off the next year on the right foot. Here’s what you need to do for your small business before the end of the year.

Accounting

This is where you spend the bulk of your time at year’s end to get your business in order. Managing your financial records is critical throughout the year, but even more so in December. By maintaining excellent records and keeping them in order, you’ll help yourself and your accountant (if you have one) when tax time rolls around.

The ‘Trump Effect’ on Your Obamacare Coverage

With our newly elected president threatening repeal of Obamacare, should you worry that your health insurance could go up in smoke?

November 12, 2016

Donald Trump will be our next president. What exactly does that mean for your health insurance coverage and access to healthcare? It’s a question that has drawn speculation from health policy wonks since the day after Trump’s election – but I’ve also been receiving many of these questions from clients who are curious about whether their coverage will change any time soon.

In truth, nobody can say for sure at this point, since there are still so many moving parts to the law. But we have some educated guesses, based on Trump’s positions and the actions Congress has taken over the last six years with regards to Obamacare.

Here are the best answers we have at the moment for some questions you might have, along with more details about what you can expect in the coming months and years:

Do you still need to buy ACA-compliant coverage?

Q: If Obamacare is going to be repealed, do I need to buy ACA-compliant coverage now?

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