How to Consistently Pay Yourself as a Sole Proprietor or LLC
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- Опубліковано 25 сер 2024
- You started your business so you could generate some extra income - so why aren't you paying yourself what you need? Watch this video to learn how to properly & consistently pay yourself as a sole proprietor or single member LLC.
In this video I cover:
✅ The methods you can use to pay yourself from your business
✅ How to record these payments in your books & on your taxes
✅ WHY it's vital to pay yourself at all
✅ Three of my favorite ways to decide when & how much to pay yourself
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⬇️ Get your bookkeeping templates from Paper + Spark:
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⬇️ Additional Resources mentioned in this video:
Watch Four Easy Hacks to Increase Your Shop Sales (That Don't Require More Traffic!) next here: • 4 Easy Hacks to Increa...
Read more about how to pay yourself here:
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Download the free get legit checklist here: paperandspark....
Step-by-step Guide to Filing Taxes for E-Commerce Sellers: • The Step by Step Guide...
The no-brainer bookkeeping system for makers: • The No Brainer Bookkee...
Next Level Numbers mastermind, learn more and apply at nextlevelnumbers.com
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⬇️ Let’s connect:
Facebook: / paperandspark
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Pinterest: / paperandspark
Twitter: / paperandspark
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👋 Hi! I'm Janet LeBlanc
I’m a Louisiana girl now living in South Carolina, a Certified Public Accountant, a serial-entrepreneur, and a mom of two. My passion is helping other creative women bring their entrepreneurial dreams to life with confidence. As an accountant and data nerd, I love creating tools + resources to help you achieve financial success in your biz and personal life.
Why should you listen to anything I have to say? Because I’ve been in your shoes! I started a handcrafted jewelry shop on Etsy back in 2011 as a side hustle from my accounting job. During my time in the handmade community, I heard a lot of the same frustrations and questions over and over. Concerns like, when am I supposed to register my shop? Do I have to charge sales tax to my customers? When do I claim this on my tax return? What sort of bookkeeping system am I supposed to use?!
In 2014, I finally united my love of handmade and accounting and founded Paper + Spark. In 2015, the first iteration of the Etsy Seller Spreadsheet debuted. This product completely changed the course of my entrepreneurial journey. Creating spreadsheets isn’t the sexiest or most glamorous product to design (although I like to think they’re pretty, for spreadsheets), but getting the chance to help creatives feel more confident about their money has been SO fulfilling and I am grateful to serve you today!
🌐 Visit Paper +: Spark to learn more:
paperandspark....
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#businessmistakes #etsysellers #ecommercebusiness #creativebusinessowner #handmadebusiness #etsytips
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Thank you
I’m so glad I ran into your channel. I’m in the process of getting my shop ready and these videos are so informative.
Oh my gosh. I sure wish I knew this when I first started my business. This is invaluable information! It's all clicking, and I am jotting it all down for future reference! You should write a book. Thank you! ❤️
Woohoo! I'm so glad this made sense for you!
I really like the set percentage idea! My goal is to get this set up within a week. Thanks for this and all your super helpful videos!
Glad it was helpful!
I started implementing Profit First and officially 'paid' myself for the first time just yesterday! So exciting! 😍
Woohoo! That's awesome Diana!
I’ve been following the Profit First method for several years now and I absolutely love it. I have five accounts setup for my business: Revenue, Sales Tax, Profit, Owner’s Comp (which is my personal checking account), OpEx, Booth Fees.
I started my percentages at 50% (of sales) as my payday, 10% to Profit, and 40% to OpEx. From the OpEx account I transfer actual cost to Booth Fees. Sales Tax is transferred right off the top and is variable based on actual tax collected.
In November of 2022, I decided to give myself a raise and now transfer 15% to Profit, 60% to Owner’s Comp, and 25% to OpEx.
This is great, Carol!
This is great. I am so confused though about the account setups. Are you saying you have 5 different bank accounts for each of those categories? What do you mean when you set up an account for "Revenue?" I am so lost. Revenue is simply what comes in, it is the 100% that comes in. So how are you storing that in an account yet spreading money across other accounts? Would love if you can break down your explanation a little more.
The technique sounds great but maybe the explanation is confusing me. I'll also read more about the method. Thanks.
Can you tell me the name or link to the video on how you setup your
If I want to contribute to a tax-advantaged retirement account, should I just take money out of my business account? Or should I send money from my business to my personal account and then use that for retirement? I want to be able to write off retirement contributions as tax deductions.
I have some business expenses that i pay for with some savings in a personal bank account. I still want those expenses to be tax deductible. Does the IRS require business expenses not to be paid with savings, but with a business bank account?
The source of the payments shouldn't impact whether the expense is tax deductible or not, so you should be fine. If you have your LLC registration, you want to avoid paying business expenses from a personal account, just because it can negate your LLC protection.
How about S Corporations?
Hi June, S Corporations have more rules around paying yourself as the owner. If you're an S Corp, you become an employee of your business. You must put yourself on payroll and pay yourself true W2 wages with taxes withheld and all that jazz. The IRS tells us that you must pay yourself a "reasonable compensation" for your work. Anything above that you are able to take as a distribution, similar to the owner draws a sole prop pays themselves. If you set this up properly and are making a high enough net income, then you can save money at tax time with this structure.
Ohh...well what if you've made the mistake of paying personal bills straight from your business account (LLC). Is there anything to be done about these past transgressions?
I'm honestly not sure if you're able to "undo" that. You can definitely reimburse your business account (like pay yourself back) but I'm not sure if you can truly undo "piercing the veil". As long as your business doesn't get sued it hopefully would never matter!
Thank you for the great info! Would recommend looking at the camera as you’re speaking - this video looked automated and scripted.