Owner’s Draw vs Salary: Paying Yourself as a Business Owner
The $30,000 profit is also posted as income on Patty’s personal income tax return. In a partnership agreement or an limited liability company (LLC) operating agreement, the terms surrounding owner’s draws should be clearly outlined. This may include details on how often draws can be made, the maximum amount that can be withdrawn, and any other conditions specific to the business. By specifying these terms, owners can avoid potential…