Owner Distribution 101: How to Pay Yourself and Handle Tax Implications

As a business owner, figuring out how to pay yourself can be one of the most challenging decisions you face. It’s not just about taking a paycheck—there are tax implications, cash flow concerns, and long-term financial impacts to consider. How do you make sure you're doing it right?

On this episode of Become Sensible, I break down everything you need to know about owner distributions. I’ll guide you through the different ways to compensate yourself, including how distributions differ from payroll, and what this means for your taxes. No matter if you're a sole proprietor, running an LLC, or managing a corporation, you'll come away with a clear understanding of how to pay yourself and manage your personal finances while staying on top of your tax obligations.

"Distribution is not just a paycheck; it’s a financial decision with long-term implications."

Connect

• Follow me, Fiona Nguyen, on LinkedIn. Learn more about Balannx.

***

Timestamps:

• 0:00 – Introduction to owner distributions and tax implications
• 1:30 – What is an owner distribution, and how does it work?
• 3:00 – Owner distribution vs payroll: Key differences
• 5:00 – Understanding your business structure and its effect on taxes
• 7:30 – Real-life example: How an S-Corp owner handles payroll and distribution
• 10:00 – The risks of drawing too much from your business
• 12:00 – Tax implications for sole proprietors, LLCs, partnerships, and corporations
• 15:00 – The importance of managing owner equity and reasonable compensation
• 17:00 – How to plan your owner compensation with tax strategies in mind
• 20:00 – Wrap-up and final thoughts on paying yourself as a business owner

Hosted on Acast. See acast.com/privacy for more information.