How to pay yourself as a business owner (and take money out of your business generally)
EPISODE 56
Notes
Do you need clarity on how to pay yourself as a business owner?
I often come into touch with entrepreneurs who aren’t 100% clear on the best way to take money out of their businesses. Whether it’s for weekly pay, bonuses or receiving a loan from your company, there are a few ways to pay yourself for showing up every day.
It’s important to note, however, that each of these structures comes with differing tax and legal implications. Today I take you through these differing structures so you can decide on the best way to set yourself up in your business.
I start with talking through the advantages and disadvantages of being a sole trader, such as the ease of using your personal bank account and the legal liability that comes with operating under this structure.
I then give an overview of the partnership setup and the similarities it shares with the sole trader structure. I explain the way profit or losses are calculated and how they are split between the partners.
If you’re looking for the best way to pay yourself for growing your business, I recommend setting up a company. I explain how creating this separate entity is really beneficial from a legal perspective, and how it can protect you personally if something goes wrong. I also run through the tax effectiveness of this structure versus sole trader or partnership.
What’s the best structure for your business to operate under? I hope today’s episode gets you thinking about which option is right for you and leads you to make the best choice for your growing business.
LINKS:
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About the
Author
Bec is a chartered accountant who worked at Australia’s big firms and banks for 15-years. Faced at a crossroads in her career, she backed herself, left her corporate job and launched Straight Up Bookkeeping. 3 years and 5 staff later, Straight Up Bookkeeping is one of Australia’s leading virtual bookkeeping businesses for creatives, with a mission to free business owners from financial stress so they can grow their empires.
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