Taking Money Out of an S-Corp: Draws vs. Salary

Taking Money Out of an S-Corp: Draws vs. Salary

https://youtu.be/VSnRp2qnXkM When you do business in your own name as a sole proprietorship, there isn’t really such a thing as a “salary” or a “distribution.” Clients and customers pay you, you pay taxes, done and done. As long as you keep your personal and business expenses separate, ideally using separate bank accounts, you’re good. As an S-Corporation, suddenly you have a choice to make every time money leaves the company’s “hands” and gets into yours: is it a draw or a salary? Draws Owner draws: Are usually either for estimated taxes, due to a specific event, or from business growth…
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Accounting for your Therapy Practice

Accounting for your Therapy Practice

We are hosting a two-hour class for new Practice Owners in February! Come join us and learn about accounting, taxes and your numbers. Does this sound like you? Wondering if you are keeping track of all of your expenses Asking yourself what some of this means? Been stumped at trying to figure out what you should pay yourself? Wanting to save for retirement but not knowing how? If so you should check out our class page and sign up for the class. TL;DR: If you are a new practice owner or have been in business less than a year this…
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What is a Reasonable Salary?

What is a Reasonable Salary?

If you have been following our series of posts about S-Corps, then you may be familiar with the phrase “reasonable salary.” But what is a reasonable salary? The IRS is particular about paying yourself a reasonable salary since your salary is subject to payroll taxes. There are a variety of ways to calculate your reasonable salary, and the IRS tends to work with a nine-factor test. The factors are: (1) Employee qualifications; (2) The nature, extent, and scope of the employee’s work; (3) The size and complexity of the business; (4) Prevailing general economic conditions; (5) The employee’s compensation as…
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