How do you pay yourself

[Jackie F.]

How does everyone pay yourself.. Do you pay yourself a "salary" or do you just take whatever is left after expenses and taxes as "profit" and thats yours to pay your bills and live your life? 

Also as an LLC or LLC "s-corp" is there a certain way you have to pay yourself from a government standpoint.. Like do you need To have any special forms like 1099 or W-2.. basically what do you file each year, do you go to your CPA and they give you the forms to file or does the government send you some form..

Ive only ever been a w-2 employee or 1099 with network marketing and the forms were just sent to me by jan 31 each year.. so I am trying to know what to expect as a business owner at tax time.. 

[Linda Weygant]

It depends on the type of structure you've chosen.

If you are a straight LLC or sole proprietorship, then you just write yourself a check for whatever you want to take. If you are a single member LLC, then everything is reported on your own Schedule C at tax time. If you are a multi-member LLC, then the income, expenses and profits will be reported on a 1065 and a K-1 will be given to you to use on your personal tax return.

If you are an LLC with an S-Corp Election or you have otherwise chosen to be taxed as an S-Corp, then you must pay yourself a reasonable salary complete with payroll withholdings, etc. You can also pay yourself with Shareholder Distributions or Dividends. The S-Corp will file a form 1120-S to report the profits and issue a K-1 to you for your personal tax return.