owner payments

Discussion in 'Small Business Helper' started by essenza, Nov 9, 2004.

  1. essenza

    essenza Guest

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    I own a business, which is currently operating at a loss. I have my payroll company issue me pay checks so that my social security is being paid. However, I don't cash the checks, but it will be considered income on my federal taxes. Should I loan my business money from personal resources so that I can cash my payroll checks? I can then use the money to pay the back the personal loan.
     
  2. tsbhelper

    tsbhelper Small Business Helper Forum Moderator

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    +5 / 0 / -0
    essenza,

    Question is answered different ways, depending on the type of business you are operating. If you are a corporation, you pay the payroll taxes regardless of the corporation making money or not. Two different returns, the corporate return where you show the loss, and your personal income tax return, where you got paid in spite of the corporate loss. I sure hope this is not the way you have things set up because there is absolutely no legal way you can get out of paying the taxes, whether you cash the checks or not.

    If you are a DBA and can use schedule C on your personal tax return for your business loss, you should be able to recover all the money that was withheld for income tax. If you are treating yourself as an employee of your DBA, and paying the additional FICA to your payroll company on your behalf, likely you will not be able to recover that portion.

    Would sincerely advise people who are in a loss position on business startup not to pay themselves any money, except as owner draw from original owner equity, which is a wash type transaction, not income, and not subject to taxes.

    The Small Business Helper
     
  3. The Helper

    The Helper Administrator Staff Member

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    +1,212 / 2 / -1
    I have to escrow 30 freaking percent of all cash I make for quarterly payments being self employed. That is alot for me and that is just normal taxes on a 1099 guy. Considering I pay some serious child support over half my money is gone from the start.....

    The tragic thing is I made some money last year so the IRS is going to penalize me for not making quarterly estimate payments this year. The IRS can get you in so many ways - you should get an accountant try www.bizdoc.com

    I feel for you but there is no one going to get you away from the taxman on this one. Just don't get like me owing all the money I do....
     

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