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What Is The Best Way To Pay Myself In My Business? January 17, 2010

Posted by Julie Duriga, CPA in Uncategorized.
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I am grateful to have had lunch with my friend Barbara last Thursday.  I met Barbara about three years ago and I am so grateful she is my friend.   I met Barbara because I was starting my CPA practice and I was looking for a payroll solution for all of my potential clients that I was going to have.  Barbara works for PayChex.

I have since sold my practice and I am astonished everyday at how many people still want to be my friend.  I thought many friends would vanish once I was no longer working in public accounting, this has proven not to be true.  Barbara is someone who has stuck with me through thick and thin and has done an amazing job in Western North Carolina providing businesses with payroll services.

Barbara told me at lunch on Thursday that S Corporation payroll through PayChex is $39.99 per month.  I just about fell out of my chair.  This is a unbelieavable deal for payroll.

I believe running payroll through PayChex will help small businesses stay out of trouble with the IRS.  Using PayChex for your payroll will keep you disciplined inside your S Corporation to make sure you pay yourself.   Not providing compensation to active officers inside an S Corporation is a HUGE red flag for the IRS.  Even if it is a small amount every month, it keeps the zero out of a box where the IRS likes to see an amount.  Remember, to run one paycheck carries with it the same burdens as running fifty checks.  There is really no such thing as “but is just one paycheck”.

I believe PayChex by offering payroll services for $39.99 is offering America its own economic re-investment recovery act.

I am not compensated by PayChex in any way except that Barbara takes me out to lunch about once every quarter.  I am passionate about small businesses and believe that small business owners are the true heroes of our economy.  I see this as a fundamental service that will free small business owners up to do what they love to do!  Worrying about payroll is silly when it is so affordable and so well done byPaychex.

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!

How Do Partnerships Pay FICA? January 2, 2010

Posted by Julie Duriga, CPA in Uncategorized.
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Partnerships don’t pay FICA tax for their partners.  If a partnership employs people, then, of course, the partnership must pay FICA taxes on their employees.  Partners in the partnership must pay their own FICA taxes as well as their own income taxes.  Some partnerships do run payroll on their own officers but the IRS doesn’t really care for this.  It may come back to the haunt the officers at a later date.

When partners take a draw, distribution or a guaranteed payment, they must take out a gross amount of say 1000.00.  From this, they must set aside 200-300 (depending on your personal situation) to pay their own estimated quarterlies.  Partners in the partnership must submit their own 1040-ES to the IRS on a quarterly basis for their taxes. 

FICA and income tax is a different tax.  When you send the IRS one chunk of cash, the IRS puts this in your account and the amounts that are figured out when you file your personal 1040.  Remember the profits inside the partnership are subject to your income tax rate even if you did not bring those profits home with you. 

Guaranteed payments taken as “take home pay” is subject to both your income tax rate and to FICA taxes.  Partnerships are similar to sole proprietorship because the partners have to pay the full 15.30% of social security/medicare tax.  FICA=Social Security/Medicare Tax.

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!