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Am I an Owner or an Employee of My Business?

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You may have established your business, been one of the founders or fronted all the finances for the startup. But how you pay yourself and how you pay taxes may not be what you think. Before you start taking money from your business and paying taxes, look at how the Internal Revenue Service (IRS) views business ownership. How a business is owned and taxed may help you decide which form of business is right for you. Business owners don't get a paycheck or pay taxes as an employee unless they do work as an employee in addition to their business ownership. As a business owner (except for corporate shareholders) you aren't taxed on the money you take out of the business. You are taxed on the net income (profits) of your business. Shareholders of a corporation are taxed on the dividends they receive. Business Ownership vs. Self-Employed All self-employed people are business owners, but not all business owners are self-employed. Here's why:

How to Pay Yourself From Your Business

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Why Business Owner Pay isn't a Salary
It's common to hear business owners talk about "getting a salary" from their business, but that's not actually how most business owners get paid by the business. The word "salary" is common when talking about employees, but business owners don't actually take a salary as an employee. How you pay yourself out of the business depends on several factors: Your business type,The stage of business you are in now, andHow much you need for personal expenses. How Business Owners Pay Themselves This schedule shows how different types of business owners get paid and how that pay is shown on their tax returns1 .