Can I Sign Minnesota Banking Document

Can i industry sign banking minnesota document myself

all right hey they're party people Jim Hart here with another episode of I don't really have a good name for this I really need to come up with something but today we're going to be talking about how to pay yourself in a single-member LLC of course I'm the founder of Hawthorne law we would work with online businesses to help them protect your legal butts and legal assets but today I want to talk to you about single member LLC's and how to pay yourself now I did a video last week about the risks of forming an LLC pacifically a single-member LLC and the different things you need to be aware of there if you're doing that but but today I want to talk about because so many of you that are starting out as bloggers as doing e-commerce businesses you maybe you're freelancers photographers whatever you might be you are basically forming single member LLC's I know that because I've talked to a lot of you and that's basically the default entity of choice and other alternative which I'm going to talk about in a later video is obviously an S corp but for purposes today we want to talk about single member LLC's because that does represent so many of you out there and the biggest question that a lot of people ask is how exactly do you pay yourself with a single member LLC and it's a completely legitimate valid question that I want to help you with today so here's what you do let me show you Rebecca so this is called a check and what you do is you fill this out and then you write it yourself for however much you want to pay yourself that's how you pay yourself in single-member LLC I'm kind of being a little corny here and I'm not meaning to be kind of sending but it really is that simple in practicality in reality it's not that simple because there's a lot of different things that you need to consider when you're paying yourself in a single-member LLC you have to consider what your expenses are in the business and making sure that the business is capitalized enough to pay those expenses you have to consider what your taxes are going to be at the end of the year when you pay yourself in a single-member LLC because all the income that you get in a single-member LLC that goes in after you take out all the taxes whatever is left over that pot you have at the end of the day that's what you're going to get taxed on now I like to follow a method by Mike Micallef it's called profit burst basically what mike says to do is to pay yourself two days a month so you pay yourself on the 10th and on the 25th me personally I kind of do distributions throughout the month I'm actually not a single-member LLC I'm an S corporation but I'll talk to you about what I do here in just a minute the way the profit first methodology is basically every time you get money in on the 10th and on the 25th that's when you pay your bills and you calculate a certain percentage of that income that's going to go towards paying yourself a certain percentage that's going to go into a separate text account a certain percentage it's going to be for owners profit and a certain percentage that's going to go towards your expenses and as you start to do this more and more you're going to figure out what percentages you're going to need to put into those different accounts and he actually advocates and I recommend doing this I've done this for myself setting up four different accounts for this so the way I've got it right now is all my money when it comes in it goes into my operating expenses account and that's where the money will stay now I have some money that comes out automatically through different subscriptions I have and things that sort but that's where the money is and then whenever I need to pay myself I will go in and look and see how much money was made between when I last paid myself and the day that I pay myself next and usually it's about once a week on Fridays and I look at that I'll take a certain percentage of that as the money that I'm going to pay myself and it's usually about 50% I will take a percentage that is going to go into the owners pay or the owners profit account which is basically like a savings account that just keeps growing and growing and growing and a certain percentage that's going to going to go into a tax account now the thing that you need to know about the tax account is people think oh I'm going to get taxed you know 20 30 percent or whatever it's going to be at the end of the year it's not on your gross income it's on your net income you're only really getting taxed on your expenses so if you're holding back let's say 30 or 40 percent for taxes or for excuse me for your expenses you don't need to withhold you know 20% of your total gross income you only need to withhold 20% of maybe the 30% that you're allocating for your expenses and you could do the math there I don't not sure what it comes out to but basically is a much lower percent so I'm withholding usually anywhere from three to six percent for taxes another thing I'll say that that I do here is with an S corporation you need to pay yourself a reasonable salary so at the end of the month my distribution is a much bigger distribution and I use some of that money that's been accumulated over the month in my my owners pay account and then I pay myself at the end of the month a what is considered a reasonable salary and again that's something we can talk about on another episode that's really only if you're an S corporation that's really what you need to do when you write this check to yourself you're just going to code that as a member distribution shareholder distribution whatever you want when you start earning net income of probably 35 to $50,000 or more then you really want to start thinking about electing S corporation status or actually forming an S corporation for your business and the reason for that is with an S corporation you're paying self-employment taxes on the amount that you take out as a salary you do not pay self-employment taxes on the amount that you take out as your distribution and and you don't actually need to take a distribution it's just whatever money is shows up as your net income is the money that you're going to get taxed on on your income tax level but with an S corporation the self-employment tax doesn't come into play with an LLC you might never take a distribution from your business but all that income from the LLC is going to flow through to your tax returns and you're going to get hit with a 15% self-employment tax on all of that that's why I say once you're making thirty five to fifty thousand dollars net income a year you really want to consider S corporation status so that's what I got for you today feel free comment below let me know if you've got any questions I'm happy to talk to you about these issues love talking about single member LLC's and how they can help you and your business so thanks folks have a good day and catch you next week bye bye you