How to Pay Yourself as a Retail Owner

If you haven't set financial goals and decided what and how you're going to pay yourself this year, this is for you.

What should you pay yourself as a boutique owner?

The answer is either:

📌Pay yourself a percentage of your profits each month
📌Pay yourself a fixed amount each month

Many times people don't choose either of these correct ways and they will pull out money randomly or use their business card for a personal expense and count it as an Owner's Draw - this is NOT the way. Time to get organized and do things right!

How do you pay yourself?

This depends on the tax structure of your business.

📌An LLC stands for Limited Liability Company and it is a legal entity that protects your personal assets. LLC taxes are attached to your personal return (1040) and put on a Schedule C. Owners get paid through drawing money from the account (Owner's Draw) - business account transferred to personal account. All net income is subject to self employment tax (combination of Social Security & Medicare tax at 15.3%).

📌An S Corp is a tax status. Usually it's an LLC electing to file as an S Corp (talk to your CPA to decide when it's best for you to become an S Corp). Owners get paid a salary through Payroll and can take distributions as well. A benefit is that only the Payroll is subject to Social Security and Medicare tax (15.3%).

👇🏼Tell us in the comments - are you currently paying yourself?