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Submitted By: someone
Answered: January 20, 2020 9:28 pm
Answered: January 20, 2020 9:28 pm
I’m a sole proprietor. Can I pay W-2 wages to myself?
As a self-employed person, you cannot receive a salary. You can take a draw from your business bank account to cover your personal expenses, but this has no impact on your taxes. You are taxed on your revenue minus expenses; you cannot subtract the draw.
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Tax Glossary
Deferred compensation
A portion of earnings withheld by an employer or put into a retirement plan for distribution to the employee at a later date. If certain legal requirements are met, the deferred amount is not taxable until actually paid, for example, after retirement.
