How to Pay Yourself like A Boss When You Are A Boss

Presented by Paystrubmakr.com      By John Wolf and Tom Cullen CPA

 

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• Wash your hands regularly with soap and water, or clean them with an alcohol-based hand rub.

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• Practice physical distancing by avoiding unnecessary travel and staying away from large groups of people.

• Coronavirus who

Self-Employed? Where to Find Assistance During the COVID-19

The Coronavirus/Covid-19 pandemic has caused financial strain for many Americans, with more than 46 million U.S. workers filing for unemployment since March 2020, when the pandemic began in earnest. However, if you’re self-employed and don’t have the safety net of traditional employment, this period of uncertainty can be particularly challenging.

Fortunately, many self-employed individuals qualify for new federal relief programs established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Approved by Congress in late March, the CARES Act created several measures to provide assistance to struggling Americans, including Pandemic Unemployment Assistance (PUA), which allows states to provide relief to individuals who otherwise would not qualify for regular unemployment insurance benefits.

As is the case with much Covid-19 relief, the amount of aid you qualify for depends on which state you reside in, but here’s a basic breakdown of what’s available to self-employed individuals.

As an entrepreneur, getting your very first paycheck after beginning the business is an overwhelming experience. You might recall those days when you were being paid by your superior/boss while doing a job. You felt secure because you knew when and how much your payments would be.

However, now you are the boss! You can set the salary and rewards for others. But how would you pay yourself? If you believe that you can essentially draw money out of the business account whenever you require, you should think again. Without a doubt all the money in your business account is yours. After all, you are the proprietor of the business.

 

So you should be careful while paying yourself as an entrepreneur to avoid specific troubles and chaos to your business finances. Here’s how.

• Know your business and its needs

As a matter of interest, decide your business type and its necessities. It will enable you to comprehend the scale of your business and your cash flow needs as well. The clearer you are about your necessities, the easier you will be able to create a suitable period and amount to pay yourself.

• Determine the best payment method for you

 

Once you have done the initial step, consider the reasonable payment option for yourself. As a rule, draw and salary are the two generally utilized payment methods. Nonetheless, you ought to take in the intricate details of both methods to end up with the correct one.

1. The draw is the most well-known withdrawal method among entrepreneurs. It is otherwise known as “owner’s draw” as it is the sum drawn by the owner for his utilization. It is appropriate for sole proprietors, business partners, and LLC who don’t take a salary. Generally, the owner’s draws are tax-free at the time they’re taken out.
2. A salary is another alternative you can choose to pay yourself. By doing so, you will be treated similarly to your employees from a tax and budget perspective. If you are a corporation where the business is legally separate from the owners, a tax legislation system will expect you to receive payment through salary, not an owner’s draw.

 

If you are opting for this payment technique, make sure to keep taxes and other deductions in mind while organizing your salary. In this situation, a Paystub tool is a great help as it creates the salary stub instantly according to the recent taxes, overtime, and other findings. All you need to do is simply fill in your details.

• So how much amount should you pay yourself?

There is no exact “percentage number” to set your share out of the income. Instead, it depends on some elements like benefits, responsibilities, partner’s share, business costs, taxes and future development plans. Observing the average income of your industry or associates is also helpful.

• Set your payroll schedule

 

When should you pay yourself and how often? It is as essential as choosing your payment. The payroll schedule fluctuates in light of variables like the number of employees and the due date of the bills. For instance, if you need to pay yourself twice a month, ensure that you will also have enough to pay the lease from your first paycheck. You can cover the remainder of your bills from your second paycheck. In this way, you will not be short of cash early on in the month.

Make sure to likewise consider the number of employees while arranging your payroll schedule to keep cash flow steady. In this way, you can pay yourself the appropriate sum of the amount at the right time in the right way. It
will not only improve your business’s financial well-being but will also take care of your funds.

To know more on how to write a check stub. visit http://paystubmakr.com/

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