Owner's Draw vs. Salary (what's the difference?) Payroll distributions in QuickBooks Online

What is the difference in payroll taxes with an owner's draw vs. a salaried employee? How are contractors and employees treated differently and who gets a 1099 vs. a W2? How do you pay taxes as a business owner and how do you record everything in QuickBooks Online. If you own a corporation, how do you get a K-1 and do distributions? There is a lot of unpack on this topic!
Videos mentioned:
Quarterly Taxes q&a: • Quarterly Taxes Q&A
Quarterly Taxes: • Quarterly Taxes: for b...
Payroll basics: • Should you do PAYROLL ...
1099s: • 1099s: how to create a...
Record start up costs: • Record START-UP COSTS ...
My website: www.finepoints...
☑️My favorite bookkeeper training (affiliate links)
💜Bookkeeper Launch free series: sk293.isrefer....
💜Bookkeeper Launch FAQs: sk293.isrefer....
💜Bookkeeper Launch checkout: sk293.isrefer....
☑️Classes taught by me
🟢How to start your business in 30 days (Bookkeeper Business Coach): finepoints.new...
🟢How to get clients (Bookkeeper Marketing Coach): finepoints.new...
☑️Free stuff
➡Is bookkeeping right for me? (free masterclass): finepoints.new...
➡How I got my first 3 CLIENTS (free masterclass): finepoints.new...
➡Start a bookkeeping business (free checklist) finepoints.new...
➡LEARN bookkeeping (my favorite training options): finepoints.new...
➡Where to start bookkeeping (chart): finepoints.new...
➡Tax Biz (free intro class on taxes): sk293.isrefer....
➡More freebies on my website: www.finepoints...
➡ Please SUBSCRIBE! / @finepointsbookkeeping
☑️Pass the ProAdvisor Test: Fast and Easy QBO (affiliate links)
For Basic (code "finepoints" for discount): www.fastandeas...
For Advanced (code "finepoints" for discount): www.fastandeas...
☑️Other awesome classes (affiliate links)
Booming Bookkeeping: www.boomingboo...
Nerd Enterprises: www.nerdenterp...
5 Minute Bookkeeping: courses.5mbaca...
▶My Bookkeeping Tech Tools: www.finepoints...
▶ Videos to get started bookkeeping:
Learn bookkeeping: • 10 ways to LEARN bookk...
Bookkeeper certification for FREE: • FREE ProAdvisor certif...
How to become a bookkeeper (with chart): • How to become a BOOKKE...
How to get clients: • 20 ways to get bookkee...
What does a bookkeeper do? • WHAT DOES A BOOKKEEPER...
Day in the life playlist: • "Day in the life" of a...
Bookkeeper Launch video: • 10 FIRST IMPRESSIONS o...
Client onboarding: • One Client, START TO F...
How much to charge: • HOW MUCH to charge as ...
Services to offer: • BEGINNER services to o...
▶ More videos you'll like:
Big, medium & small clients: • CLIENT EXAMPLES: Small...
Niches playlist: • Niches for bookkeepers
Before you start: • Bookkeepers: 7 THINGS ...
Impostor syndrome for bookkeepers: • How to overcome IMPOST...
10 reasons to start bookkeeping: • WHY START BOOKKEEPING?
How to clean up a client's books: • How to do a "CLEAN-UP"...
#bookkeeper #finepoints #bookkeeping

[@FinePointsBookkeeping]

Whew! That was a lot of info. What other questions do you have about salaries, W2s, contractors, 1099s, S-corps, distributions or K-1s?

[@jimmyharrisiii]

You did an awesome job explaining the different scenarios!

[@FinePointsBookkeeping]

Thanks for the positive feedback! Krista (FinePoints Admin)

[@olivianwankwo2335]

Hi, I happened upon your video and found it so helpful so thank you for sharing.

[@FinePointsBookkeeping]

Glad it was helpful! Krista (FinePoints Admin)

[@JoeJarrell]

This was such an insanely helpful video. Thank you!

[@FinePointsBookkeeping]

Glad it was helpful! Krista (FinePoints Admin)

[@azielbrown]

Great video!!

[@mrs.howell1905]

Thank for this

[@FinePointsBookkeeping]

Thanks for watching and being engaged!

[@sanjavukelic548]

Thank you 👍 I am certified bookkeeper but don't have work experience so this is very helpful for my job applications 🙏😇

[@FinePointsBookkeeping]

Glad it was helpful!

[@badgerlifter9572]

Just opened myself a S-corp/LLC. This video was a nice review. I currently hired a bookkeeper, but am considering getting into bookkeeping as a side gig. (I am a physical therapist assistant)

[@FinePointsBookkeeping]

Bookkeeping is a great side gig--let me know if you have any questions about it!

[@maryflackonline]

so, as an LLC, I am considering paying myself as an s-corp, so a bi-monthly salary. In addition, I expect to take "distributions" which I would pay quarterly taxes on, correct? What about the money that I don't take out of the business? Is that taxed as profit the same way it was when I was taking only owners draws?

[@JettingChen]

6:44

[@mavenfeliciano1710]

As a corporation one's salary could be higher than one's owner's draw which means a bigger tax deduction. Am I understanding that correctly? What about non-profits, including those that garner millions+, or CEO of the non-profit?

[@EARN-750-DAILY_JOB_FOR_U]

"You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something-your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life." -Steve Jobs

[@FinePointsBookkeeping]

Wise

[@user-ks2jt4fp8p]

Can I use an owners draw to pay back money I put into the business to get it going? It’s a Llc type. I want to not pay taxes on it.

[@mrs.howell1905]

Not to be all in your business, but do you mind disclosing what was that dollar amount you reached that your accountant said to switch over?

[@FinePointsBookkeeping]

I think around 40K annually is the average threshold. It may vary household to household depending on what else you have going on.

[@mrs.howell1905]

@@FinePointsBookkeeping Profit?

[@FinePointsBookkeeping]

Yeah, net income.

[@joeytaxes8673]

Hi, hope all is well. Question. In my LLC, if I make $100,000 in a year, and I take out or Draw $25,000. On my LLC, P&L it still reads $100,000 because the draw is not an expense, yes? Now do I claim the $25,000 as income on a Schedule C or just enjoy the money? Thanks JC

[@FinePointsBookkeeping]

You claim the full 100k, b/c that's the profit of the biz. For this biz type it doesn't matter the amount you transfer to your personal account--only the biz profit matters.

[@joeytaxes8673]

Great, that part I understand, my inner question is the $25K I take out - do I claim it in a Schedule C or do I not claim the 25K.....I hope I am making sense.@@FinePointsBookkeeping

[@mrs.howell1905]

Also what made u choose s instead of c?

[@FinePointsBookkeeping]

That was what my accountant recommended--I think that C-corps are for bigger businesses.

[@MrFitbikeco10]

So owners draws are not taxed personally. Got it

[@kimberlypearson2018]

I work for a law office. Partners take a distribution. Do I pay them thru payroll or as a vendor. All have direct deposit

[@FinePointsBookkeeping]

For our partners, we write paper checks for distributions (they prefer that). You can definitely put it through a payroll company, as long as it's marked as a distribution (not going on the W2).

[@Maricela.Gricel]

❤👍🏼