Question: If you’re a single member LLC, how do you record paying yourself?
Answer: You can record this an owners’ draw from your business. This is not an expense. You can write yourself a check, or just make a transfer from your business banking account to your personal banking account. Owner draws should not show up on your income statement.
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Where do I record the term “owner’s draw,” and how do I get this to show correctly (not as an expense) in a program like Quickbooks or WaveApp? I have been trying to figure out how to pay myself as a sole prop. without totally messing up my finances and organization. Thanks!
Great question! – You will want to go to your Chart of Accounts (in either program) and create an Equity account called Owner’s Draw. This will allow the transaction to show up on your Balance Sheet instead of an expense.
My son has a LLC 1 owner with 2 employees. I am doing the payroll thru Quicken & have been paying him as An employee taking out taxes, fica & paying unemployment taxes on him. I listened to your u tube is this not the correct way to pay him?
Thank you for any assistance.
Hi Barbara – If your son is a Single-Owner LLC taxed as a sole proprietor, he should not receive his pay through a payroll. If he’s a Single-Member LLC taxed as an S-corporation, he should receive a reasonable salary through a payroll.
– If I’m an LLC taxed as a S-Corp am I considered an employee of the corporation? And if so, will I need to pay payroll for myself? (I do payroll for all my assistants, including workers comp. And it costs me an extra 25% per assistant. So that would mean paying an extraa 25% in payroll expenses.)
Yes, you would be considered an employee of the business and would need to pay yourself a reasonable salary. You can learn more about S-corps and the salary requirements here: https://amynorthardcpa.com/everything-you-need-to-know-about-s-corporations/