Getting Money Out Of Your Biz Account

Status
Not open for further replies.
Spliffic

Spliffic

Loves Cron Jobs
Apr 5, 2008
1,214
27
0
VanCity
I just recently setup a corporation and have been getting paid into my biz account. I have a bit of cash sitting there but would think it's wise to get it out asap with all the FTC and other bullshit going on. You just never know.

Problem is, I can pay myself but I will be taking a huge hit on personal income taxes this year. Do you guys just pay yourself these huge amounts and pay a shitload of taxes? I know this is a question to ask an accountant, but my problem is that he doesn't understand the true nature of my business and the risk involved with keeping the cash in my biz account.

Just wondering what all of you do to avoid getting screwed on taxes. Or is there no way around it and we're all pretty much fucked? I mean there's only so many new computers, desks and other expenses I can spend my money on.
 


Can't you just take it out in the form of your payment, then later in the year deposit it back into your business, aka "investing" your money back into your business.

I dunno, kinda talking out of my ass here.
 
Well, a shady banker at BOA told me every time I write a check to myself from my business account it's considered a "business expense". Then every time I deposit money back it's consider capital investment.

I have no idea if any of that is true. I would suggest talking to a good accountant, something I need to do myself.
 
Isostar13 said:
Well, a shady banker at BOA told me every time I write a check to myself from my business account it's considered a "business expense". Then every time I deposit money back it's consider capital investment.

I have no idea if any of that is true. I would suggest talking to a good accountant, something I need to do myself.
Click to expand...

That is complete nonsense. When you write a check to yourself it's called an owner's draw and is not treated as an expense. Accounting 101 ftw.
 
You will be fine. Take the money out if you are all shook up. In Nov or Dec, meet with your accountant and he will advise you where to put the money (investments, etc) to have the lowest possible tax obligation.

A corporation is not a shield from paying massive amokunts of taxes unless you made a massive amount of money (Talking 500K plus last year.) Also, passing the money onto yourself is not going fool the FTC or any gov authority looking to pound your guts with a massive bureaucratic penis.
 
Isostar13 said:
Well, a shady banker at BOA told me every time I write a check to myself from my business account it's considered a "business expense". Then every time I deposit money back it's consider capital investment.

I have no idea if any of that is true. I would suggest talking to a good accountant, something I need to do myself.
Click to expand...

Any dipshit can be a banker.
 
You can take money out of a corporation 4 ways
1) Loan to yourself
2) Dividend or Distribution
3) Salary-Payroll

A loan to yourself can be used to shift income into different reporting periods. The loan must be paid back to the Corp. otherwise the Corp. writes it off and issues you a 1099 because it becomes income to you at that point. The IRS will penalize you about 20% of the loan amount if they catch you abusing this.

A dividend or distribution is the preferred way to pay yourself because it allows you to avoid employment taxes. If you are ever audited (due to the nature of affiliate mkting) the IRS will only allow about a 50/50 split ie Officer Salary/Distribution. In other words, If you take a distribution of 100k, you should also take a salary of 100k.

Keep in mind the distribution (unless your a C Corp.- your CPA is retarded if you are) is not taxable to you on your 1040 because it is REPORTED on your corporate return. The P&L from the Corporation lands on your 1040 and determines the tax amount.

Why does this matter? Because if you have accrued profits from previous years sitting in the Corp. then those profits from previous years should have been taxed already.

What you pay yourself and what you report as taxable on your 1040 can be very different amounts.

One thing the IRS will let you get away with is lump some distributions. Lets say that you can make the case that your contribution(expertise) to the Corporation is worth about 100k a year and you pay yourself that in a salary and your business actually nets an extra 200k. After 3 years you should be able to write yourself a check for 600k without the IRS claiming you owe employment taxes. This is very generalized and everyones situation is different but that the basics. Your accountant should be able to look at your situation and advise you of the best ways to mitigate the tax bite. There are alot of strategies that can help, multiple businesses etc.. but at the end of the day you will pay taxes or get ur butt jammed with dick cake in the slammer.

I have been audited several times and these are just my observations, I'm not an accountant, although I do have a BA in accounting
 
  • Like
Reactions: Spliffic
Unarmed Gunman said:
That is complete nonsense. When you write a check to yourself it's called an owner's draw and is not treated as an expense. Accounting 101 ftw.
Click to expand...

yes. also, if you think at the end of the year you might be paying a whole lot of income tax, and are not good with keeping up with finances, ie. don't think you will have that money saved up for paying taxes, you can pay extra fed tax each month on your payroll to yourself.
 
One thing to remember, whatever is left in your account at the end of the year you have to pay taxes on.

Pay yourself a salary of 100k / year and then everything else is a profit distribution. You skip the self employment tax this way I believe. (same thing rawbones said)

Get yourself a good business accountant, not a personal one.
 
rawbones said:
You can take money out of a corporation 4 ways
1) Loan to yourself
2) Dividend or Distribution
3) Salary-Payroll

A loan to yourself can be used to shift income into different reporting periods. The loan must be paid back to the Corp. otherwise the Corp. writes it off and issues you a 1099 because it becomes income to you at that point. The IRS will penalize you about 20% of the loan amount if they catch you abusing this.

A dividend or distribution is the preferred way to pay yourself because it allows you to avoid employment taxes. If you are ever audited (due to the nature of affiliate mkting) the IRS will only allow about a 50/50 split ie Officer Salary/Distribution. In other words, If you take a distribution of 100k, you should also take a salary of 100k.

Keep in mind the distribution (unless your a C Corp.- your CPA is retarded if you are) is not taxable to you on your 1040 because it is REPORTED on your corporate return. The P&L from the Corporation lands on your 1040 and determines the tax amount.

Why does this matter? Because if you have accrued profits from previous years sitting in the Corp. then those profits from previous years should have been taxed already.

What you pay yourself and what you report as taxable on your 1040 can be very different amounts.

One thing the IRS will let you get away with is lump some distributions. Lets say that you can make the case that your contribution(expertise) to the Corporation is worth about 100k a year and you pay yourself that in a salary and your business actually nets an extra 200k. After 3 years you should be able to write yourself a check for 600k without the IRS claiming you owe employment taxes. This is very generalized and everyones situation is different but that the basics. Your accountant should be able to look at your situation and advise you of the best ways to mitigate the tax bite. There are alot of strategies that can help, multiple businesses etc.. but at the end of the day you will pay taxes or get ur butt jammed with dick cake in the slammer.

I have been audited several times and these are just my observations, I'm not an accountant, although I do have a BA in accounting
Click to expand...

+rep

This is the kind of info I'm looking for. I will discuss this with my accountant, but like to be a little bit educated on the subject before going into meetings cold.
 
rawbones said:
You can take money out of a corporation 4 ways
1) Loan to yourself
2) Dividend or Distribution
3) Salary-Payroll

A loan to yourself can be used to shift income into different reporting periods. The loan must be paid back to the Corp. otherwise the Corp. writes it off and issues you a 1099 because it becomes income to you at that point. The IRS will penalize you about 20% of the loan amount if they catch you abusing this.

A dividend or distribution is the preferred way to pay yourself because it allows you to avoid employment taxes. If you are ever audited (due to the nature of affiliate mkting) the IRS will only allow about a 50/50 split ie Officer Salary/Distribution. In other words, If you take a distribution of 100k, you should also take a salary of 100k.

Keep in mind the distribution (unless your a C Corp.- your CPA is retarded if you are) is not taxable to you on your 1040 because it is REPORTED on your corporate return. The P&L from the Corporation lands on your 1040 and determines the tax amount.

Why does this matter? Because if you have accrued profits from previous years sitting in the Corp. then those profits from previous years should have been taxed already.

What you pay yourself and what you report as taxable on your 1040 can be very different amounts.

One thing the IRS will let you get away with is lump some distributions. Lets say that you can make the case that your contribution(expertise) to the Corporation is worth about 100k a year and you pay yourself that in a salary and your business actually nets an extra 200k. After 3 years you should be able to write yourself a check for 600k without the IRS claiming you owe employment taxes. This is very generalized and everyones situation is different but that the basics. Your accountant should be able to look at your situation and advise you of the best ways to mitigate the tax bite. There are alot of strategies that can help, multiple businesses etc.. but at the end of the day you will pay taxes or get ur butt jammed with dick cake in the slammer.

I have been audited several times and these are just my observations, I'm not an accountant, although I do have a BA in accounting
Click to expand...

FTW! I second this. Make sure you pay yourself a salary or they will come get you :D

Payroll taxes and social security SUCK.
 
Status
Not open for further replies.
Top Bottom
Back