Forums: Discussions for entrepreneurs and small business.

My business is preparing to lanch, and I`ve been wondering how do I get paid?  I have a single member LLC, so everything is seperate: bank accounts, etc.  Most of the money I make will stay with the business for marketing, bills, etc. But do I get a salary, or do I pay myself on commission or on a bonus structure. 

How are you doing it?

At the end of the day, it really doesn`t matter.  From a tax perspective, in an LLC you have income when you receive revenue from sales, whether or not you pay yourself or it stays in your business bank account.  If you plan on having steady revenue, you may want to consider treating yourself as an "employee" and paying yourself a salary every week/month/etc, but this is really only necessary from a budgetary and fiscal disciplinary perspective.

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Pepper Law Group, LLC
21 E. High Street, Suite D
Somerville, NJ 08876
informationlaw.com
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The Legal Considerations of Starting an Online Business

Nice! Seems really simple. Thanks for your quick response.

La Juana

pepperlegal,

Just what I was going to say...

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Edgar Monroy
Web Developer / Owner / Consultant
When starting your own business the need to "know-how" is greater than money!
http://www.nuevolution.net

I would add one more thing -- you may wish to consult with someone like Pepper (I do not know him or his group).  All of your net income (whether you take it or not) may be taxed as personal income.  You mentioned one item -- you want to reinvest a lot of the income into the business.  Please consult a legal or tax advisor so that you do not give money away.

Thanks for the advice everyone, I really appreciate it!

My CPA said with an LLC, the IRS basically sees me and my business as the same entity, therefore ALL business revenue is my income. Draw whatever salary or wage you can afford to pay yourself, and don`t forget to send in quarterly estimated income tax payments. Keep very good records, because whatever is left over after you deduct expenses from revenue is what you will pay taxes on, regardless of whether or not you have actually paid yourself. Hopefully you`ve written a business plan and projected your earnings, so you can have a basis to estimate income taxes against.

No disrespect intended toward all the good solid advice given so far, but a CPA is likely going to be your best investment in this situation. This is my first full tax year to file (for 2006) and my accountant gave me a detailed list of  deductions and business expenses I can subtract from gross revenues.  

Even if you`re financially independent, pay yourself something periodically, because it will remind you who you`re working for and motivate you to carry on.

I wish you much success!

Carole