Ever wondered about the distinction between owner's draw and salary?
To help answer this question, we’ve broken down the differences between an owner’s draw and a salary in this post.
As a reminder the decision to take a salary or an owner's draw depends on the specific circumstances of your business and your financial situation.
The legal structure of your business can impact your ability to take an owner's draw. For example, if you own a single-member LLC, or are part of a multi-member LLC, you’ll need to use the draw method to pay yourself. LLC owners are not allowed to pay themselves a regular salary.
An S corp is structured as a corporation, there is no owner’s draw, only shareholder distributions. But a shareholder distribution is not meant to replace the owner’s draw. Instead, you must take a salary as a W-2 employee.
Not accurately recording your owner's draws or salary?
Schedule a call with us today to ensure your financial records are accurate and your business stays on track!
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