Well, I'm looking forward to this one. I want to know how to pay myself, Jeremy. Yeah, I was going to say, everybody likes to talk about this. How do I get money? How do I get the money out of the business, right? Fine. And I love that it's got $100 bills on here. Just saying. I'm in for the Benjamins. Just take it out. Take it all out in cash, right? Probably not going to have cash much longer with this new digital currency that the US set up. That's a discussion for another time, Sharon. I think in our lifetime, there'll be no more cash. Yes. It'll all be digital so that the government can track everything and stop money laundering. Oh, that's a thought. Actually, I have noticed that vendors who play music, you used to throw money in the hat, they have their Venmo up there now. I know. I know. We know a lot of people don't carry cash anymore. That would be me. I do not carry cash. We're taping this. We're right here at Christmas and Salvation Army. Those people are ringing the bells and I don't want to ever have any money on me. Yeah. Yeah, they got to think of a new strategy, don't they? I agree. Yeah, yeah. Well, mainly today, we're going to be talking about paying yourself as a PLLC, LLC, as a sole proprietor. If you're not incorporated, you don't have it or you have a PLLC or LLC versus taxing yourself as an S corporation. Because those are the two big ones that we see all the time in the CRNA community. When should I go to be an S corporation? So today, we're just going to talk about the differences and how it works. Hopefully, I can keep it pretty simplistic. OK. So when you're a sole proprietorship, and when I say that, that just means you're working for yourself and you are not a PLLC, LLC, or S corporation. OK? OK. Follow me? Because you had a look on your face and I got a little worried. It's OK. I got it. All right. But a sole proprietorship also works the same for an LLC or PLLC, depending upon which state you're in, that is not taxed as an S corp. Because they consider that what's called disregarded entity, and it's taxed the same way back to you, Sharon, the employee. OK? OK. All right. So the profit distribution. So you can always take a draw from the business. You can pay yourself profit. You can do that at any point in time you want to. There's really no rhyme or reason around that. You have self-employment. What's that? I do that. I take distributions. Yeah. But you're set up a little different because you're an S corp. But you can't do distributions without the S corp. You can take all the money out of the business if you want to. But remember that all that money that's there, and this is the key, because this is something that CRNAs ask about all the time. OK. All that money that you made. It's important, then. It's very important. All that money that you made, you will pay self-employment taxes on it. If you don't remember what self-employment taxes are or how they work, go back to that module because you cannot take everything you make and then come up at the end of the year and not have enough to pay taxes. OK? So as the sole proprietor, you are responsible for paying those self-employment taxes, 15.3%. You will also be paying personal income taxes on this money. So if you made income in that business, you'll pay personal income taxes on it. Either way, make sure you save enough money in the company to be able to pay your taxes. Oh, yeah. That's the first thing I do. Whatever I make, 30% goes into a savings account right straight off the top just for taxes. Perfect, because I don't think you'd look great in stripes. Oh, no. And orange is not in my color wheel. Yeah, so this is just an important piece for people to understand. Again, it's not rocket science. Most people get it, but there are some people that don't. If I'm making money, set aside enough to pay the taxes. Yeah. First thing, it's like tithing to the government for me. Absolutely. Tithe, the first thing. Absolutely. So sole proprietorship, you don't have to set up a formal payroll. You just pay yourself whenever you want to. Now, the S Corporation works a little differently, Sharon. OK, that's what I am. Now, we'll see. You can give me some slack. I just switched to an S Corp. So I'm learning as we go along. Yep. So as an S Corporation owner, you set up a salary. And remember back from our self-employment section, that salary is what you pay the self-employment tax on. Not everything the business made, just the salary. And the sun's coming in. I got the sun behind me, sun on my face, Sharon. It's great. We're all excited to talk about getting paid today. Yes. So when you set up that salary, though, it needs to be reasonable. And that will be subjected to payroll taxes and withholdings. Now, that doesn't mean that everything else is not going to be taxed. Because you can take money out of an S Corporation two ways. You take it out as a salary, or you take it out as a dividend, or better known as a distribution. That's what I'm doing. Yes. And so you can take distributions out of the business outside of salary. The sizzle to the distributions or dividends is the fact that they are not subjected to self-employment tax. So this is the difference between being an S Corporation and not being an S Corporation, saving that self-employment tax. So dividends are taxed at a lower rate than wages, because wages have self-employment tax in it. Distributions and dividends don't. All right. So that is the tax advantage of an S Corp. Sharon, that's like S Corp 101 right there, OK? When you're paying yourself, that is the advantage of the S Corp over being just a straight PLLC, LLC, or sole proprietor. That's it right there. So it's not real hard to understand. But when you've got the S Corp, there are lots of other things you've got to do. And we have another section on that as well. But you do have to set up a formal payroll, just like you get from your W-2 position at the hospital or clinic or wherever you work at. You have to set it up for your own company, OK? And that's a little different. And it's a little more time consuming, a little more government filing that has to go on. And there must be a reason that people are doing this, right, Sharon? Right. It is, because the majority of time you save on taxes if you do it the right way. What do you do? Well, you've really got to evaluate your needs, your financial goals. So one of the things that I always ask clients when we sit down with them is, how much money does it take a month for you to live? And they start to get this deer in the headlight look. Because what happens is the more money you make, the less you do that nasty B word. And I'm not talking about what people called you in high school, Sharon. I'm talking about budget. Not me, man. You know, budget. The more money you make, the less you do it. But we've got to figure out how much. I'd rather be called the other than budget. I hate to be called the other. The majority of CRNAs, I believe, would, too. Yeah. But you've got to be able to do that, because we've got to determine how much money needs to come in to hit your bank account so you can pay your bills every month. Look at legal liability. Make sure you understand that you've set a reasonable salary. OK? What are you trying to accomplish? How much can you save in your retirement plan? How much are you trying to save in your retirement plan? All these things sort of go together. If you set a salary that's too low, you can't max out your retirement plan the way you want to. If you set a salary that's too high, you're paying more in self-employment taxes. So it's a balancing act. So all this goes back to that P word, Sharon. Planning. Get your mind out of the gutter. Gosh. Planning. This all goes back to planning and having a plan. And just remember, you've got flexibility in doing this. Sometimes people think that, oh, I do this, I'm locked in. No. You can change the way your structure is depending upon your needs and your goals. What works for you, what works for your family. And one of the things that I always say to people is when you are a 1099 CRNA, that is a business. It is a business, and it needs to be run like a business. But the goal of this business is to get you, Sharon Pierce, where you want to go financially in the most efficient tax way possible. So this business is set up for us to help you reach your goals and your objectives. What are they? Well, I want to pay less taxes. OK, everybody wants to do that. I want to retire early. I want to save more in my retirement plan. You know what? I want to be able to go to A&A meetings and have it as a tax-deductible expense. All of these things, these goals and objectives, go into making some of these decisions. So it's not always straightforward.

business owner

taxes

salaries

financial goals

professionalism