How much do you pay your self?

Conversation
41

Liking the middle of your post but not the end.

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42

Alot of valuable info thanks alot guys for sharing!

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I will give you a nugget @squidskcā€¦ you start a different LLC company up that you own and you buy your trucks through it and lease it to your service company. You do this to keep liabilities away from
Your service companyā€¦ accidents, lawsuits etc. some guys also do this with their equipment.

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44

Smart, solid advice.

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I think you should of saidā€¦

I will give you a ā€œgoldenā€ nugget!

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46

I save the golden ones for myselfā€¦

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47

We only get silver and bronze. Lol

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48

Like others have saidā€¦ Stop what your doing and buy profit first. It will change your life.

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49

Kicking myself, put profit first on hold at the library and missed the email and never got it. Off to Barnes and noble this afternoon. Maybe it was meant to be to HAVE a copy instead of borrow oneā€¦

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50

No joke.:flushed:

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Earlier in the same post there were guys telling me I should lease the
equipment. But then it got to the truck lease and they lost their mind.
Theyā€™re the same thing. I stopped commenting because I couldnā€™t wrap my
brain around it.

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I believe the answer to the question is:

As much as possible

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53

I was researching the profits first method and I came across the profits first podcast. Itā€™s very informative too

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Hereā€™s the one Iā€™m listening to now. All I can say is WOW! Iā€™m going to buy the book for sure.

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56

We still have libraries? And newspapers?

Big NOOK fan and am going to order it for that.

Just kidding, by the way. I am an actual, certified bookworm and I read everything.

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57

Just bought the audiobook and man is this book amazing! Thanks to all who recommended it.

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You guys have sold me on this Profits First book, I will have my copy today. Is there any other research you guys found to be an amazing plus to your success when it comes to how you compensate yourself?

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All you need is Profit First :slight_smile: Its the official plan.

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60

not the first time they lost their minds over there. I read but rarely say a word. I use the PM.
Maybe too much SH

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61

Yes, PWRA is an odd little microcosm.

Itā€™s good for any newcomers to remember to take everything with a heaping tablespoon of salt or sugar or whatever will make it go down easier. And also try and remember that most members there are genuinely interested in seeing you succeed and make $$$ washing stuff. They just donā€™t seem to be very good at conveying that in a tactful way.

But back to the topic at hand:

Set yourself up as an LLC or INC and take the S-Corp election. Then pay yourself a salary thatā€™s as little as can be considered ā€œreasonable compensationā€ by your CPA and the IRS. Take the rest of your income in the form of quarterly profit distributions.

This one tip alone will save you thousands per year on payroll taxes (SS, FICA, etc.- that 15.3% youā€™re used to paying for self-employment taxes).

For the 2019 tax year, we saved around $4k in payroll taxes. Our CPA informed us after the fact that we paid ourselves a bit larger salary than was really necessary, and could have saved even more than that.

Last year was sort of a wash due to lower profits, but being incorporated and paying ourselves a salary had other unexpected advantages in terms of applying for PPP & EIDL funds.

This year we hope to save $5k-$6k overall by taking a somewhat smaller salary.

TL;DR: less can be more. S-Corp: ask your CPA if itā€™s right for you. :wink:

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