
The P.T. Entrepreneur Podcast
EP277 | How Should You Pay Yourself
March 19, 2020• 13m
Got a great question from the PT Entrepreneurs Facebook group about how to actually pay yourself when you're the boss, especially in a cash practice. It's a common question, and getting it wrong can cost you big time. We dive into the differences between structures like LLCs and S Corps, talk about the concept of a "reasonable salary" versus distributions, and why payroll taxes matter. I explain why just picking a low salary to save on taxes can backfire hard during an audit. Bottom line: understanding how to pay yourself legally and efficiently is crucial, but it's not something to guess on. 🔑 Key Takeaways: Your business structure (LLC vs. S Corp) impacts how you can pay yourself. S Corps allow for salary plus distributions, potentially saving on payroll taxes, but require a legally justifiable "reasonable salary". Setting your salary too low without justification is a major red flag for the IRS and can lead to audits and back taxes. How much you *should* pay yourself depends on your specific role, business performance, and state regulations. 🧠 Pro Tip: Don't rely on Facebook groups for tax advice. Invest in a qualified CPA who specializes in small businesses. They can help you determine a reasonable salary and structure things correctly to avoid costly mistakes down the road. 🔥 Want to Grow Your SEO Without Burning Out? ✅ Use Clare AI to get 2–5 hours/week back on documentation ✅ Join our free 5-Day Challenge to work smarter ✅ Book a free strategy call and get personal help with your SEO + growth plan