When It Comes To Paying Yourself : Business

If you own your own business, and you have questions of when to pay yourself, always have a separate bank account for your business. the following will list several cases of how you pay yourself when owning your own business.

Single Member LLC-this is the default (or automatic) option- no paycheck. You just need to draw money when you want it. All your profits be self-employment income, whether or not you draw the money or not.

Partnership- If you have a partner, or spouse who also owns the business. Again, just draw money. It will be "no-follow"self-employment income. The rest of the profits , even if you don't taken them, will still be reported on your personal tax return as self-employment income.

As a corporation- In this case, you must set up a payroll and draw wages. Any profits left in the company at the end of the year are taxed at the corporate level.Then later when you take them out, you are taxed again as dividends.

As a S-corporation- In this case, you must set up a payroll and draw wages. Any profits at the end of the year are taxed, only on your tax return.
Most business's starting out begin a an LLC. They keep this status until their business is built up. Though if you want your business to flourish, I would treat your business like a business and be wise on your choices regarding your business.