Business owners: How are you paying yourselves?

[fastbub]

I have an LLC that we have been flowing through our 1040 for 3 years now. I have never taken a paycheck but I am ready to now. How do you guys with a small LLC pay yourselves? I have based my pricing on my overhead including employees, fixed and variable expenses and profit margin and my desired salary at 40 weeks a year since it is somewhat seasonal on the east coast.

I am transitioning now from part time with a full time job to full time now. I am still working my old full time job part time right now and am easing in to the full time with my business.

Should I pay myself hourly based on breaking down my desired salary until I am 100% full time? Should I take a lower hourly rate and then a bonus If I end up doing better by the end of the year?

What are you guys doing?

 

[ROYCE]

I am an S-corp. This allows me to take an owners draw at anytime. This is a benefit to me because I do not have to pay pay-roll taxes on it. Now, I still have to pay taxes but not payroll taxes so it saves the business some money. If I paid myself 100K through our payroll service then the business has to cover half of my SS, FED TAXES, and VT TAX etc.
I have to still take a salary that is run through my payroll. It just doesn't have to be a HUGE number. I pay myself like an entry level climber. Then, based on the year I can take an owners draw based on the profit of the year. Or, I can defer and keep the profits in the business to continue to grow the business. This is what I have done to date.
I would pay yourself a salary that you need to live off of. If thats 400 a week then great. Then at the end of the year see where your finances are. If you had a good year, take some of it.
I have seen business where the owner scrapes the cream right off the top. Don't be that guy. Take what you need to live and then every year pay yourself a little more. If you business continues to grow then you will make more as it grows. Just my 2 cents.

 

[fastbub]

Thanks for the advice. This is along the lines of what I was thinking and the same as the advice I am getting from my friend who is the financial manager for a medium sized business. I am still trying to explain this to my wife, but that might be a different subject all together.

 

[Evan Sussman]

We are 4 years in. I've to this point paid myself an hourly wage for sales, and production time. Not for office etc. This way I put a reasonable burden on the company based on work load. Now that we're more or less full time I think I'm gonna move to a salary, or at least partial distribution (s Corp LLC) and partial wages, hourly or salary I'm not sure.. The end result in gross pay will be similar, but no payroll taxes on s Corp distributions.