How much to pay ourselves

I find it easier to pay myself a flat rate of $1K per week, that more than covers any household bills.
Then, if I want or need to buy anything, I buy it through the company so I get the tax write off.
Also don't want to put yourself in a higher tax bracket.

 

How much can you get by on? As a business operator just starting out as such, draw out the least amount you can live on and let the account build.

When you get towards the end of the year, re-evaluate your cashflow and go from there. If you want to pay out a bonus to yourselves, go for it. But not before you're certain your taxes and other relevant expenses are covered.

 

Nah, that's not a relevant consideration.

 

As far as how much, the IRS says you need to take a reasonable salary for the job you do, I sure would,not take much more than 40k a year each, at least as far as the IRS is concerned. Don't want to pay tax on more than you need to. As far as how that's up to you,since you are married to your team partner just make sure accountant is up on O/O taxes.

 

Midnight, I forgot who has a great explanation about being an LLC and paying one's self and taking the rest in dividend - I should have bookmarked it.

I think if you pay yourself a prevailing wage, plus the other stuff (retirement deductions) then take the balance as a dividend, you won't get dinged by the IRS. Most likely you are going to be a target if you present a large dividend and a small wage.

 

I set myself up as an LLC filing an S Corp 3 years ago. When I established what would be my baseline "officer" salary, I took what the average hourly truck driver makes per hour in my area and multiplied that by 40 hours a week. That's what I pay myself as an employee of the company, plus other benefits.

I also take periodic distributions from the S Corp...

Operators of certain taxable entities, such as S corporations, have the option of collecting profits from the company as either payroll or shareholder distributions. The Internal Revenue Service expects shareholder-employees to take a "fair and reasonable" wage in the form of payroll.

 

With that type of income I hope you have a LLC, and a truck smart accountant, the goal is to lower self employment tax, but you both need to pay in equally so if you need to apply for social security disability from illness or injury you will qualify for a good amount, and for later at retirement you both can draw a check.

Ask the accountant about depreciation, per diem, and how many truck owners they have as clients.

Just because they are accountants don't mean they know about trucking. Not knowing trucking could cost you thousands a year,

You will have depreciation this year that can be taken in different ways , it is important that it be used in the best way now and the next few years.

 

On the other hand every "truck accountant" that I interviewed came up with some pretty wild crap about how to lessen my tax liabilities, so I went back to my old accountant who had handled only commercial accounts and had him set up the scheme for me.

Some of these "truck accountants" (one was a popular one with lots of clients) told me not to worry about per diem and other things when I asked that made me very uncomfortable and would have cost me money in the long run.