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#1 Mistake Business Owners Make

Not Paying Yourself is the Biggest Mistake Business Owners Make.

When you run a business, you must deposit ALL business income into your business bank account. (Please don’t stuff it under your mattress!) You should use this money to pay your business expenses. You should not take money out of the business account to use it as you please. You should not pay personal expenses with your business checks, debit cards, or ATM cash withdrawals. You must use the business income for paying business expenses. Since you work in the business, your salary is a valid business expense.

 

Business Owners Make One Major Mistake

YOU MUST PAY YOURSELF A SALARY

 

 

This doesn’t mean just transferring money from your business account to your personal account. Nor does it mean writing a company check to yourself and putting “salary” or “payroll” on the memo line. Doing this will subject you to the same “Self Employment Tax” contractors pay. This is an additional 15.3% tax on the money you paid yourself.

Technically, you do not “own” the business, it is an entity unto itself (like an artificial person). You are an employee of the business and must be paid as such.

The business should hire a payroll service that will issue you a W-2 at the end of the year and make all the payroll tax deposits that are required by law.

This is the best way to make sure you are compliant with IRS guidelines.

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A major benefit of choosing Abundant Returns as your full spectrum tax and financial professionals is you gain access to our full team of highly experienced CPA’s, Enrolled Agents, Business Consultants, Financial Experts and staff that can assist you. Our professional team members enjoy working with clients who are building successful businesses that concentrate on growth and development. We stand by our work and welcome further auditing and second opinions because we KNOW our team has covered all the bases to keep more money in your pocket. Our founder, Larisa Humphrey, built this company on a strong foundation of ethics, accuracy, and honesty. As an IRS Enrolled Agent she has earned the privilege of representing taxpayers before the Internal Revenue Service by passing a rigorous three-part test on tax law for individuals and businesses.

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