STEVENPALMIERI

Walk the loop

How you pay yourself: what to check before the call

How you pay yourself.

Why it matters: The way money moves from the company to you decides the entity question, the tax bill and what a lender believes.

Answer it and see your picture.

What lives here

  • Salary through payroll
  • Owner draws
  • The split between the two
  • The entity that makes the split right

What good looks like

  • A paycheck you set on purpose.
  • Draws that are planned, not reactions.
  • An entity that fits the profit.

Do this yourself

  1. Add up what you took from the company last year, both ways.
  2. Write the two totals side by side.
  3. Bring them.

See it on a company like yours

Here is the entity question for Cinder Mesa Landscape, the fictional company in our worked examples.

The entity question

Illustrative composite. Not a real client.

Cinder Mesa Landscape LLC was formed on March 4, 2019 in Arizona. Cinder Mesa Landscape LLC is a disregarded limited liability company with Elena Varga as the principal. No S election is in the file. The 2023, 2024, and 2025 returns are Schedule C. 2023 net income is $378,800. 2024 net income is -$16,119. 2025 net income is -$211,800. An election would first have paid in 2023, the first year in this worksheet with a profit and with self-employment tax. 2024 and 2025 would not have paid for one. This example does not promise a dollar result. The 2026 wage ledger shows $11,976 of principal pay. We set payroll up. The owner runs each payday with the provider they pick.

Open this page in the Tax planning example

Open Payroll in the CFO example

Read more on the Who we serve page

Steven sees your answers before the call. Nothing here is graded.

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