S2E20: How to PAY Yourself as an Employee or IC with The Beauty CPA
Now that you have (or your business has) decided how to categorize yourself as an employee or an independent contractor, its time to get PAID!
In Part Two of this Series, Kenesha and Shannon explore how to make sure you get paid properly depending on your business. Working smarter to be strong and sweet in 2021!!
- What is an Independent Contractor or Self-Employed Beauty Professional?
- You are the business owner
- May receive Form 1099 from salon/spa owner or you are receiving monies from your clients and accounting for it yourself
- Responsible for paying and remitting all taxes - federal and state income and payroll taxes
- How you should pay yourself depends on how the business is structured:
- Sole Proprietorship/SMLLC/General Partnership/MMLLC:
- take an owner’s draw from your business banking account.
- Best if done at regular intervals and amounts
- Best if transfer in electronic
- Still responsible for all taxes
- Misconception: If you don’t take an owner’s draw you will not be taxes
- All Net Income is subject to tax, so pay yourself what you want
- Owners are put on payroll and paid a “reasonable wage”
- Corporation withholds federal and state income and payroll taxes
- Corporation pays half of payroll taxes
- Will receive a Form W-2 at the end of the year
Learn More from Kenesha Coleman, The Beauty CPA @thebeautycpa or on her info packed website The Beauty CPA!
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