How to pay yourself as a business owner

Most of us start a business so that we can have additional income or so the business can pay us. Rather that is full-time or part time. I hope that your goal is to make money. If not, why are you in business? You are in business to not only share your gifts and talents but to also get paid for them.

So, the most common business entity to start is usually an LLC. Many people start as an LLC because it is one of the simplest entities to run that provide asset protection to owners.

What many people don’t know, is that members of an LLC’s cannot pay themselves a salary or expense out their time spent in running or building the business. LLC’s are not allowed to pay themselves as an employee. If you have been doing this and ever get audited, you will have to pay back the total amount you paid with interest simply because that is not the proper way to pay yourself.

If you need money to pay your personal bills you take whats called a draw from your business. Simply put, you take a withdraw from your business bank account. Many small business owners just use their debit card to pay whatever personal expense they need at the time. Which causes them to have a lot of individual personal transactions coming out of their business bank accounts. The proper way is to withdraw the money and pay the bill through your personal account. But due to convenience most small business owners do not do this. If you can, grown you business to were you can pay yourself one lump sum each week , bi weekly or monthly from your business. If you start to make a big profits you may want to look into switching your business to an SCorp. With an SCorp you can then actually pay yourself through payroll.

Remember, you are an LLC to protect your personal assets. If you continue to commingle your personal expenses with your business expenses, you yourself are not protecting your personal expenses. So, if ever sued or taken to court, you give the judge the right to go after your personal assets.


If your business is growing and you will like to know more information on how you can properly pay yourself click here to schedule a free consult .