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dianna@thetruckingva.com

Tax question

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Hey fellow VA's

 

As we all know its tax time for some of us :) so my question is do you pay yourself in your accounting system? I have quickbooks and I am not a quickbooks expert LOL so I am not sure how I would enter paying myself, I didnt think it would go under employee payroll, right? If any one has any tips and tricks let me know.

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Dianna

 

It would depend on how your business was set up. You could be paid either by taking distributions or by receiving a salary from your business. This is something that you will probably want to discuss with an accountant.

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As we all know its tax time for some of us :) so my question is do you pay yourself in your accounting system?

 

Generally speaking, Dianna, your payments to yourself should be structured as follows:

* If you are a sole proprietorship (or an LLC taxed as a disregarded entity), then your payments are called "Owner's Draws" and are recorded in an equity account labeled as such. Bottom line, your payments are not a business expense.

* If you are operating a partnership (or an LLC taxed as a partnership), then payments to the partners are called "Partner's Draws" and are recorded in an equity account labeled as such. If you pay yourself a fixed amount each week or each month, then you could alternatively consider your checks to be "Guaranteed Partner Payments" and there is an Other Expense account for such payments.

* If you are operating an S-Corp or C-Corp (or an LLC taxed as a cop), then you need to be paying yourself through a proper payroll system, complete with tax withholdings and employer taxes. You would pay yourself just as if you were an employee.

 

I hope that helps!

Deb

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