How to Pay Yourself - Owner Distributions

You can pay yourself through transfer, check, or payroll

Sole Proprietors or LLCs being taxed as a Schedule C (and owner not on payroll)

For these entity types the owner of the agency should NOT be on the payroll of the business.  In that case, the profit of the business can be shared with the owner through distributions.  There are three best practices when it comes to paying yourself through owner distributions. 

1. Transfer directly from your business account to your personal account (please let us know that the account is personal so we know to record it correctly)
2. Write yourself a check from the business account to your personal account
3. Set yourself up in payroll for automatic Draws to your personal account (more information to be provided later)
   1. This is ONLY applicable for Sole Proprietors and is most common for Gusto payroll users
   2. In most payroll systems you can't be both a taxable employee as well as receive untaxed draws, so this would be most applicable to Sole Proprietors where the owner of the Agency is not on payroll
   3. For detailed instructions on how to set this up appropriately within Gusto, click here for a link to their support article.

S-Corporations or LLC's being taxed as S-Corporations

For these entity types, the owner of the Agency can and should make two forms of income:

1. W2 income - this is where the owner of the Agency is placed as an employee of the business and receives a set salary based upon their role within the Agency
2. Distributions - these are the additional earnings stemming from the profit of the agency that can be shared with the owner.

Similar to the above, there are two methods to distribute profits to yourself from the Agency: 

1. Transfer directly from your business account to your personal account (please let us know that the account is personal so we know to record it correctly)
2. Write yourself a check from the business account to your personal account