Looking for clarity

Taxes.

 

Depends how you set it up. If it's just a sole proprietor yeah you can do whatever you want with the money.

If you set the business up as a completely separate entity it's not your money, it's the businesses money. You must pay yourself a wage, with payroll taxes and everything.

That's the short answer anyway

 

Maybe you're a little confused why they would do this if they were a sole proprietor since its all the same account. Most O/O have a corporation though. So it is physically a different business account from which you have to actually pay yourself as an employee. Money does transfer from the business account to your personal and that is your wage.

 

$900 a week

 

When I had a limited company, I had a payroll account and held back my taxes on my wages, then submitted the taxes quarterly.
I’m now a sole proprietor. I have a separate bank account for business use. When I pay myself, I transfer an amount once a month, then take a calculated portion of that and send it to a third bank account that I set aside for taxes. Then remit that quarterly.
How much you pay yourself depends on your operation. Early years I was lucky to make $30,000 a year. Then $50k became common. Then $70-80k. Now breaking $100k, but that’s only because I’m out of the land of payments. Truck and trailer are paid for, I won’t be replacing them. Heading for retirement in a year or so.

 

It depends your situation. Do you need money? Do you need a personal loan in the short term future? You can pay yourself regular payroll and pay taxes or dividends which is taxed less in some instances but banks don't really count that as income so you'll have trouble getting a mortgage or loan. Do you have your equipment paid off? Talk to accountant about your situation and he will advise the best way to place the money to minimize tax loss while meeting your personal and company needs.

 

In a nutshell, a solo o/o pays himself a reasonable salary and then, of course, draws dividends - which are subjected to lesser taxes than the payroll.
It is a matter of a personal challenge and daring when when a solo o/o draws more in dividends than in the "reasonable salary" - in order to make up for what the "reasonable" might have not been reasonable after all.

Some say that from all the gross profit the "reasonable" is at least 60/40 ratio , some say 50/50...but let's be reasonable and honest here - the reasonable is reasonable only if you were able to actually hire someone to do YOUR driving work for that salary. Well, now it is a matter of interpretation and further polemic if you could find such a person or not.

P.S. Not only the driving work but often the clerical work as well.