As an Entrepreneur How Much Should You Pay Yourself

When considering different compensation amounts and timing,  you must first consider the structure of your business. The IRS’s requirements for owner compensation are different for corporations, sole proprietorships, partnerships, and LLCs, so you’ll need to first determine what your legal rights and obligations are.

Depending on your business’s entity type and whether you’re taking a salary or draws, there are tax pros and cons to taking a payout versus reinvesting in your company. Make sure you’ve educated yourself on these pros and cons and plan ahead.

You may wish to consult with an attorney to find out specifically which tax regulations affect your company depending on your entity type and tax election.