Empowering Healthy Business Podcast Episode 16: Owner Compensation Tax & Accounting with Greg Reed
Understanding owner compensation is a key part of running a healthy and financially sustainable business. Many small business owners aren’t always sure how to pay themselves properly or what method best aligns with their business structure. In this episode of the Empowering Healthy Business Podcast, we break down the different ways owners can compensate themselves and what each method means for your tax strategy and financial reporting.
From salaries and guaranteed payments to owner draws and profit distributions, the options can be confusing. That’s why gaining clarity on understanding owner compensation is essential. This episode helps you evaluate which form of compensation is best based on your business type, whether it’s an LLC, S Corp, or sole proprietorship.
Tax Considerations and Bookkeeping for Owner Compensation
Choosing the right compensation strategy isn’t just about getting paid, it’s about tax efficiency and financial clarity. Some forms of compensation are subject to self-employment tax, while others may qualify for payroll tax withholdings. Understanding owner compensation also means knowing how to track and report it in your books accurately.
We cover best practices for recording different types of payments to owners, including how to document wages in payroll systems and how to track distributions separately from regular business expenses. Accurate reporting improves your visibility into business performance and prepares you for audits or tax filings.
Why Understanding Owner Compensation Matters
A well-thought-out compensation plan supports not only your income but your business’s long-term financial health. Missteps in this area can lead to costly tax penalties or cash flow problems. By understanding owner compensation in detail, you’ll be better equipped to make smart decisions and avoid common pitfalls.
This episode delivers actionable advice to help business owners pay themselves the right way, optimize tax outcomes, and ensure their financial reports reflect reality.
About the Empowering Healthy Business Podcast
The Empowering Healthy Business Podcast is your guide to building a profitable, scalable, and sustainable business. We support entrepreneurs with insights on finance, strategy, and wellness so you can grow your company without sacrificing your well-being.
Check us out at www.empoweringhealthybusiness.com.