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When and what to pay yourself

 
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Moosevoice
Club 300


Joined: 16 Nov 2012
Posts: 376
Location: Iowa

PostPosted: Sat Oct 14, 2023 12:14 pm    Post subject: When and what to pay yourself Reply with quote

I'm not an LLC. I DO have a separate bank account that my job payments all go to.
Wondering how much to pay myself, and when?
There's a booth purchase coming up soon but other than that there's no foreseeable expenses coming up.
We could use some of my voice income for household expenses as this money is just sitting there.
What's a good rule of thumb?
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Bob Bergen
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Joined: 22 Apr 2008
Posts: 935

PostPosted: Sat Oct 14, 2023 2:04 pm    Post subject: Reply with quote

Hire a good financial planner for this. No one can (nor should) really answer this for you without knowing your numbers and portfolio.
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Moosevoice
Club 300


Joined: 16 Nov 2012
Posts: 376
Location: Iowa

PostPosted: Sun Oct 15, 2023 9:53 am    Post subject: Reply with quote

Yeah, we have one but wanted to get a general rule of thumb. I'll ping my FA
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Bruce
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Joined: 06 Jun 2005
Posts: 7915
Location: Portland, OR

PostPosted: Sun Oct 15, 2023 4:43 pm    Post subject: Reply with quote

Captain Obvious here....

When you have a regular weekly or biweekly salary it's "easy" to set up a plan for regular expenses, special expenses, and your near term and distant future needs. However, if you're totally freelance your income can really surge and drop, and that makes planning tricky. The basic thing to do is take every incoming dollar, spend it on the bills, and then everything else goes into a decision pile. That can be your savings account(s). Then choose what further imaginary "piles" that money goes into -- and one of those has to be the emergency fund for when your work and receipts slow down. Eventually you will come up with an "average" set of income and expense amounts, but as a freelance that can change in a flash.

Most of all, find the discipline to stow away excess funds for that "rainy day" and your "bright future".

B
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I'm not a Zoo, but over the years I've played one on radio/TV. .
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todd ellis
A Zillion


Joined: 02 Jan 2007
Posts: 10469
Location: little egypt

PostPosted: Mon Oct 16, 2023 7:05 am    Post subject: Reply with quote

Not answering for you --- but for me ...

I'm not a CPA, but I do have one. Unless you are incorporated in some way - all the money is the same (no matter how many checking accounts you have) - it's all yours, and taxed as such. I am an S-Corp. The corporation pays me a monthly salary from which FICA/Medicare/etc, etc ... are deducted. That's MY money. All the rest belongs to the corporation. The corporation pays me rent and pays for business related expenses. The only thing the IRS says about a "salary" is that is must be "reasonable". So far, nobody has been willing to tell me what that number is. But believe me, if it's too low, they'll let you know in a letter you don't want to get.

Taxes are paid quarterly based on the previous year's income, which is a huge issue when working freelance and years go up & down, sometimes, dramatically. So it's a tightrope between paying enough but not paying too much. At least for me - I like to hold on to as much of my money as possible.
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