The Best Way to Pay Yourself as a Business Owner

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The Best Way to Pay Yourself as a Business Owner
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Опубликовано:

21 дек 2023

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Комментарии : 29

@barnabasbucao87 7 месяцев назад

To answer the caller’s question, using an S corp election (assuming this is a pass through which it probably is) and paying yourself a reasonable salary allows you to cap the payroll taxes which would otherwise be imposed on all of the earnings as self employment income. The earnings are all taxable but the portion of the earnings not taken through payroll is only subject to income tax.

@Boringcountrylife 7 месяцев назад

Thanks, I was coming to the comments to say that. We pay no soc sec on our withdrawals. We realize that will limit our soc sec when we are older so we choose to invest wisely instead of asking the government to.

@USMC6976 7 месяцев назад

@@Boringcountrylife Withdrawals have never been taxable. Profit (owners) is taxable or income (for wage earners) is taxable.

@ALPHA-ROTH 7 месяцев назад

@@Boringcountrylife usually if you are in business, you are hoping to not need social security when you are older. just make sure your w2 wages would be reasonable, because they can take your dividends and say they should have been w2 earnings and you will have to pay some back taxes. scorp is easier than self employed i think.

@Chele-nm4qx 7 месяцев назад

My husband gets a w-2, I take a business owner draw. We’ve done it for 24 years & we pay quarterly estimated taxes. Works for us so we don’t have a huge tax bill due in April.

@fkillah 7 месяцев назад

This doesn't seem right. My accountant has me pay myself as a W2 and the rest as a K1 distribution since that gets taxed at a lesser rate.

@melakraus88 7 месяцев назад

Exactly. We even had in covid one year where the first 20 or 25% from K1 was tax FREE.

@d.schmidt16 7 месяцев назад

Talk to your CPA, I believe you can take a very modest "salary" and you get hit with the 15% payroll tax, and then the rest of the income as "profit" thus to avoid the pay roll tax.

@Kevinbajamedic 7 месяцев назад

That’s what my CPA has me doing.

@USMC6976 7 месяцев назад

You will pay FICA & Medicare tax regardless how you take your profit from the business.

@mroberts566 7 месяцев назад

This is true, but the salary has to be “reasonable.” That’s subjective, but if your company nets $1 million profit per year and you pay yourself a salary of $100 per year to avoid paying payroll tax, that’ll get you audited.

@Dsquareddyson 7 месяцев назад

Does Dave not know how S-corps work?

@Jim_Curtis 7 месяцев назад

Instead of calling Ramsey, call your accountant first since he/she is licensed to give tax advice. The first question should have been how the business is structured. If it's a corporation, it is required to have a reasonable amount of W-2 salary. If it's a partnership or sole prop, he cannot do W-2 for himself.

@harpjason208 7 месяцев назад

Thanks Team Ramsey. Merry Christmas to you all.

@emilyalfonso2965 4 месяца назад

Can you give advice on how to calculate giving 10%. Should it be on what the business makes net? Or 10% on what the business makes after calculating monthly taxes. I am the only employee (owner) - I want to give cheerfully while also acutely. Thank you!

@dfarmer_ 2 месяца назад

Sounds like the action items were correct but taxation on W-2 vs owner's distributions (K-1) is different. Both are subject to income taxes, but owner's distributions are not part of payroll and not subject to payroll taxes.

@ALPHA-ROTH 7 месяцев назад

you pay yourself w2 if you are working a position in the company, a "reasonable wage"...which is not really defined. i set mine up as half days and full days of work, base my salary on that...the rest of my pay is dividends i take out every week. we tax ourselves higher on our w2 to account for income tax on our dividends. the IRS can reclassify your dividends if your wages are too low and then you can get hit with a tax bill on the interest you owe...because you dont pay social security or income tax on dividends. thats why they watch those payments. but i am a SCORP.

@frankcb11 7 месяцев назад

Yeah Dave company is probably too big to do some of this stuff people are saying people usually do. But yes a lot of y’all are right

@mizan1030 9 дней назад

If I were Dave, I’d leave this question for CPAs

@veroelecktra3531 4 месяца назад

Per the comments … file as an s corp and set myself up as a w2 … got it 🎉😂

@planwithjack4689 7 месяцев назад

Dave, I love you but this is very inaccurate and you need to take this video down. There is no self employment tax on SCorp or CCorp distributions, what you are calling an owner payout. Also, the amount run through payroll determines limits on retirement contributions through the business SEP/simple IRA/401k So it most definitely matters which he does and the tax is very different.

@kevinkohut5096 Месяц назад

Depends on the business structure. Dave giving advice when he doesn't even know the business structure is scary!

@RockOfTruth_OFFICIAL_John14.6 4 месяца назад

NOTE TO SELF (upon returning at tax time to file taxes) READ BELOW COMMENTS (to gain better insight)

@Gumardee_coins_and_banknotes 3 месяца назад

Do it the Jeff bezoz way.

@jamesjazzy8040 7 месяцев назад

Yes, Dave, we've heard it all before. You did the best thing possible. You're always ahead of everyone and you beat everyone out. Why not just say your god and end the whole show... And we'll just go to the bible for answers... Everyone's an idiot and you're smarter than everyone else we get it...

@fkillah 7 месяцев назад

Wtf did you get this from watching this video? Oh, you’re one of those bitter haters