How Do I Pay Myself From My Corporation?

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Shareholder Payment Methods

  • Pay Yourself from Company
    • Pay yourself a formal wage or directors fee.
    • Pay yourself in dividends.
    • Take out a shareholder loan.
    • Pay yourself as an independent contractor and get a 1099 form.

Utilizing Shareholder Loans

  • Let the corporation take a loan and not have to count this as personal income, as long as it’s paid back within one year after the corporation’s year end.

Payment Strategies

  • Simple Payment Strategy
    • Pay 60% of your business income to yourself in wages.
    • Pay yourself 40% in distributions.

Tax Considerations for S Corp Owners

  • If you work in the company, you will receive a salary, which will be taxed like normal employee compensation.

Paying Yourself from C Corporation

  • Employee Payment Method
    • Register a payroll account with the tax authority.
    • Withhold source deductions from your pay and remit them regularly.

Bonus Payments and Taxation

  • Bonus Taxation
    • All bonuses are treated as wages with payroll taxes expected.
    • Profit distribution with C corporations results in double taxation.

State Income Tax Considerations

  • If you are in a state other than for a vacation or temporary purpose, you might be required to pay state income taxes.

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