Asking IH: How can I pay myself (bootstrapped solo company founder)

This would be a lot simpler and cheaper if you'd created an LLC instead of a C-Corp. You'll also be getting taxed twice—once for the corporate incomeprofits (before it pays you) and then again on your personal earnings when it does.

Unless your plan is to raise VC, I'd shut it down and create an LLC in a tax-friendly state.

I'm currently in essentially the exact same position. I'm interested to hear the suggestions as well.

Robin, I bootstrapped my company and I agree with the comments below. I have an LLC and it's so easy. Not sure what you're doing come tax season, but the LLC allows you to file your own taxes with little complication. The business goes under the Schedule C of my return, which is manageable on TurboTax, for example. Two of my sisters are CPAs and they both said for now an LLC is best.

You can still make the S corp election to the IRS so that you don't get double taxed though. Check out Gusto too

I'd highly recommend something like Gusto, it handles all the employer/ee filings an tax witholdings for federal, state, and local. AND does other filings like federal/state unemployment insurance etc which my state requires even though I only have 1 employee (my wife). I've been using it for a few years now and have zero complaints!

I know you said you don't have money for payroll services, but you'll probably be paying a pro at least as much over a year to handle anything else so I figured I'd at least share! For 1 employee for me, its under $50/mo.

Here's a referral link that gets us both $200: https://gusto.com/r/CzQ3V/

I guess there's no way of doing so without triggering the IRS accidentally. Yet if there is no option to wait, I would choose LLC too. But you do need to raise funds in order to use payroll services and do the taxes clear like W2 https://fillable-form-w2.pdffiller.com/ and other payroll things, in order to not be questioned by tax guys

Company is an LLC, but files taxes under S-Corp

Pay myself salary via Gusto as employee (needs to be relatively accetable rate or else IRS not happy; can't be $1/month to avoid taxes). Taxes taken out via Gusto same as any other employee.

Then for company profits I pay quarterly self-employment estimates based on previous years.

Definitely echo the comments about switching to an LLC. No reason to have a C-corp unless you are going to raise money.

We have 3 co-founders so it's a little different but we have a member managed LLC for the business and each of us has our own LLC (S-Corp election) that are the acting members. Payments are passed through from the business LLC to each of our LLCs.

I spent most of our first year just paying myself as a sole-proprietor. Taxes were pretty high on this but I wasn't making enough to justify the need for my own LLC.

This year, I set up an LLC with the S-corp election. This let's me be a W2 employee, pay myself "a reasonable salary" (IRS guidelines), and move the additional income as a ownership distribution. The distributions get taxed at a lower rate because the W2 already paid out for social security, federal, & state taxes.

Be sure to check your state laws for unemployment & other taxes. I can't even imagine how much of a headache this would be without Gusto.

My approach with Dependabot was to just draw down, paying no tax, and knowing I would need to sort it out before the end of the tax year.

After doing that for about 6 months we got to the size where it felt sane to get an accountant (~6k/month in revenue). I had to pay some back-taxes, but no fines. Deferring those taxes, and the expense of having an accountant, was a 100% sensible thing to do.

If you do the above, make sure you sort it within a year, and are doing it only when your revenue number is really low. No-one wants you to get fined in that situation, so you'll find everyone is very understanding.

(UK experience.)

I don't know how it works in the US, but in general, when you open a company you cannot use company money for personal expenses.
So if you want money from the company you need to take dividens, be paid by the company as an employee or eventually as a contractor. Depending on your country, can be also illegal to work for free (or less than the legal minimum salary).
I strongly suggest you find a professional service to help you. You seriously risk paying big fines if you do something wrong. If you don't have the money for that, you probably opened a c-corp too early.

I'm not an accountant, I recommend getting professional advice. But a C-Corp is a taxable entity. You need to be declaring and paying corporate taxes. Then you can either pay yourself as an employee with W-2, etc, or take dividends as a founder (or both). Both of these are personal income that needs to be declared and you pay taxes on it as well. But you can't just withdraw money from the corporate account without declaring it as a dividend or pay personal expenses from the corporate account.

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