How you pay yourself is crucial and depends on your business structure. If you run an S or C Corporation, you’re likely required to take a salary and for sole proprietors, you’ll take an owner distribution. Regardless, it’s important to establish your compensation plan early, even if your business isn’t fully stable yet.
When determining what to pay yourself, balance your personal needs with your business’s financial health. Ensure you pay yourself enough to live comfortably but not so much that it hampers your business’s growth. As you grow, so should your salary. Regularly compare your salary to industry standards and, for S and C Corps, consider getting a reasonable compensation analysis to protect yourself in case of an IRS audit.
If you’re unsure about how to set up your pay structure, don’t hesitate to consult a professional. Contact our office to schedule a consultation and get expert advice tailored to your needs. We’re here to help you ensure you’re paid fairly and your business thrives.
Joy Lutz, CPA, CTP
As the founder of Aligned CPA, Joy has built a firm that is your strategic financial partner. With a growth centric approach, we build meaningful relationships with our clients because we value their success as much as our own.
Positioning ourselves as the tax and financial strategists for your business, we help you make empowered, financial-based business decisions that lead to long term success.