You have a good business, your cash flow is adequate and affords you to make consistent withdrawals for your personal expenses. Or maybe you pay personal expenses directly from the company coffers because its just so convenient and being a business owner keeps you extremely busy.

There is more than one reason why you should consider processing payroll for yourself (or you and your partners if you have them).

Benefits of processing payroll for yourself

In the scheme of things, processing payroll for yourself (and partners), typically in the amounts you transfer to your personal account(s) can allow you much more flexibility when trying to purchase or even rent various personal assets.

processing payroll
processing payroll

Allowing you (and your partners) to demonstrate the overall health of your business, and solid foundation of your personal finances by being able to produce consistent paystubs and a W-2 at the end of the year. Eliminating the necessity to show “inflated” profits to potential lenders, leading to your intended down payment to be “swallowed up” by the tax burden you created for yourself while trying to prove to outside entities that you’re able to afford the service requirements on the loan for which you are applying.

Processing payroll will also allow you to reduce your obligation to The Internal Revenue Service, state tax agencies, and local entities. And provide more flexibility in the manner in which you conduct business.

It’s a great idea to get a professional working on your payroll, in order to avoid any tax problems, and ensure that you’ve signed up for what you think you’ve signed up for. They can help you:

  • Respond professionally to IRS correspondence
  • Determine your monthly/quarterly/yearly liability
  • Understand the IRS & State Filing process and deadlines
  • Advise you on the best ways to pay family members and dependents
  • Advise you on issues “reasonable compensation”
  • Provide you with the best practices for processing payroll as a “Solopreneur”

Responsible Person

It is important to designate the appropriate individuals as a “responsible person.”

The IRS aggressively goes after anyone they can when it comes to payroll taxes, even if the designee is not an owner of the business. (See our “Tax Resolution – Payroll Taxes” page under services for more information

Solutions for Your Compensation/Payroll Challenges

Contact us at no obligation to you so we can understand your specific payroll and compensation needs and provide advice on the options available to you.