Will My Business’ Equity Affect My Personal Taxes?

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If you are a business owner, it can be difficult at times to separate your personal and business financial matters. If your business is a sole proprietorship or a single member limited liability company, it is common for you to take a draw out on the earnings of the business to pay yourself. Some business owners choose to take money out of their business through a draw rather than paying themselves a regular salary. 

Given that your business would have already paid taxes on the amount of the draw, you would not be responsible for paying additional taxes upon depositing the check from your business in your personal account. If the government required you to do so, it would essentially mean that business owners would be paying taxes twice on the same sum of money. Businesses pay taxes based on their net income, and a draw is simply treated as a distribution of income. It is not necessarily viewed as a business expense. There are no limits on the number of draws you can take from your business. 

It is important to consult with an attorney who regularly represents small businesses in setting up their operating practices so that you are not at risk of violating any tax or corporate laws. A business attorney can advise you on the best corporate structure for your situation and what you need to do to avoid raising red flags with your financial procedures. 

Contact Experienced Business Attorneys Anthony J. Madonia & Associates
You should retain the services of seasoned Chicago Illinois business attorneys to help you navigate complex legal situations with your business. Contact the firm of Anthony J. Madonia & Associates right away at (312) 578-9300 to speak with knowledgeable Chicago Illinois business attorneys about legal issues concerning your Illinois business.