Are Owner's Draws Taxable? Common Questions Answered!

Рет қаралды 1,919

Күн бұрын

Sign up for our newsletter here: www.claracfo.com/newsletter
Understanding owner’s distributions and their tax implications is crucial for small business owners. In this video, Hannah addresses some excellent questions from our newsletter subscribers about this topic. Learn how distributions can affect your taxes and clarify common concerns to help you navigate these financial decisions effectively.
In this video you will find:
0:00 - Introduction
0:30 - Tax Implications of Distributions
1:15 - Subscriber Questions: How are distributions taxed?
2:29 - LLCs Taxed as S-Corporations
2:55 - First Question: Excess Distributions and Capital Gains Tax
3:20 - Common Mistakes to Avoid
4:03 - Second Question: Owner's Compensation vs. W-2 Wages
4:42 - Different Entity Types and Taxation
5:45 - Tips for Managing Distributions
6:00 - Sole Proprietors, Partnerships, and S-Corporations
8:29 - Basis Calculation
10:53 - Negative Basis Situations
13:00 - C-Corporations and Double Taxation Explained
To learn more about CFO services for B2B services providers making over $1M in annual revenue, go to: claracfo.com/cfo-services/
💲 Need an accounting system? We use Quickbooks Online with clients and recommend it as the best accounting system for small businesses. Sign up to get a discounted subscription for 12 months! claracfo.com/QBO
🙋‍♀‍Got Employees? Talk to ADP! They can help you if you are a small business owner or an accountant or advisor who works with small businesses. Learn more here: claracfo.com/adprun
💸Pay vendors any way they want and get paid faster! Accept credit cards without paying merchant fees! Melio is a fantastic payments solution for every small business! claracfo.com/melio
(As an affiliate or referral partner for these companies, I may earn rewards from qualifying purchases)
Hannah Smolinski is a #CPA and the Founder of Clara CFO Group. Find out more about Clara CFO Group at claracfo.com/
Disclaimer: This video is intended for educational purposes and should not be taken as legal or tax advice. You should consult with your financial professionals about your unique financial situation before acting on anything discussed in these videos. Clara CFO Group, LLC is providing educational content to help small business owners become more aware of certain issues and topics, but we cannot give blanket advice to a broad audience.
CODE: MB01VY3CWL8S0KM

Пікірлер: 27

@bradthomas5856 Ай бұрын

Hannah, your channel does a real service to the public. Good info!

@ClaraCFO Ай бұрын

Thanks! I appreciate that statement! I sure hope so! That’s the goal 🙌

@AngelBooksForYou Ай бұрын

Your videos are the best. Thank you for doing them. They are very informative and I have learned a lot from you. Thanks for being vulnerable too. Nobody is perfect!

@ClaraCFO Ай бұрын

Ain't that the truth! Thanks for watching and being here!

@chrisallen9303 22 күн бұрын

You do such a great job, you learn, we all learn ;) Thank you for everything.

@proposability 25 күн бұрын

Can you please provide insight into how to analyze the owners equity section to determine how much money the owner can take out of the business both from a current year and from prior year perspective? Should owners be taking draws every year? Would love to hear you speak on this

@juliestarkel2561 Ай бұрын

Thanks so much for your videos Hannah! So so helpful for business owners who 'do it all' and don't have a finance team! And on a different note, I should have been an accountant.

@ClaraCFO Ай бұрын

Ha! It's never too late Julie!!

@debrathompson554 Ай бұрын

Please talk about a business owner having an S-Corp and how it flows onto the personal tax return and how the owners tax bracket is how the S-Corp is taxed, how to reduce tax bracket

@ClaraCFO Ай бұрын

Well, you will be in a lower tax bracket if you make less money, but that's not what I generally recommend :) But I think I get the gist of what you are trying to say! I am not a tax CPA, so I won't do many videos about tax strategy. But I can explain some concepts!

@MiDiosPoderoso Ай бұрын

Thank You😊

@ClaraCFO Ай бұрын

Thanks for watching!

@sethabathabamorganramaili2783 Ай бұрын

Hi Clara I am also following your videos very well and loved 😍. Please try to include us in South Africa where we have different entity types than the one you refer. 😢

@sethabathabamorganramaili2783 Ай бұрын

Cima enrolled with a start-up company

@ClaraCFO Ай бұрын

Oh yes - this only applies to US companies! I hope someone in SA will do videos like this to help SA businesses!

@dailymomentum Ай бұрын

Awesome videos ❤

@ClaraCFO Ай бұрын

Thanks!

@Ockv74 Ай бұрын

❤❤❤

@SaquibHasan-si7pe Ай бұрын

Hi Clara can you answer my question relating to payroll

@ClaraCFO Ай бұрын

what question?

@SaquibHasan-si7pe Ай бұрын

@@ClaraCFO I am using QBO Advanced and recently acquired ADP for Payroll. Both have been connected. Now my concerned is related to Chart of Accounts mapping. My question is that a single expense account named Payroll Tax Expense in QBO is sufficient for all four types of Employer Taxes (SUTA, FUTA, FICA SS, FICA Medicare) in ADP or we need to make 4 separate expense accounts in QBO as the granular detail & reports will be available on ADP. Similar is the case with Employee taxes withheld, is a Single Tax Payroll Liability account in QBO enough for Employee taxes (FI, SI, FICA SS, FICA Medicare) in ADP. Now if we create separate accounts there will be numerous bank feeds to be matched every time payroll is run, also the details will always be fetched from ADP so what's is your expert advise on this? should a single account be linked to ADP or multiple accounts need to be setup.

@unikovida6645 Ай бұрын

Open communication Radical transparency Harmonious like minded group

@ClaraCFO Ай бұрын

🙌

@relaxedclub9425 Ай бұрын

if she made 50,000 profit, & withdrew 60,000, how was that possible? Where did the 10,000 come from?

@RedshitDesert Ай бұрын

Did your business have any loans? You could have excess cash from a credit card loan for example

@ClaraCFO Ай бұрын

It was most likely cash that was already in the business from prior year earnings. It could also have been from borrowed funds.

@proposability 26 күн бұрын

@@ClaraCFO If the additional draw was from prior period profit (retained earnings) wouldn't that cash have already been taxed? Also, can you speak more to negative equity? Thank you