How to Take Money Out of Your Business
Working on your startup until it has finally begun to turn a profit is a lot of hard work. It doesn’t come without a lot of sacrifice, determination, and strength of will. So, when your business does finally reach a stable level of profitability and success, you deserve to pay yourself for the work you have done. Getting money into your business is easy when you are starting out, simply using the money you have saved on your business is all you have to do. But getting money out gets harder. Here are three ways that you can take money out of your business.
Take Out a Secured Loan
The first way that you can get money out of your business is by taking out a secured loan against your business as collateral. This is a great way to keep all the money in your business available for you and pay back the loan from your profits as they come. This is especially useful if you are continuing to grow and expand your business as having cash on hand can be helpful during a growth period for your business. Consider this as an option.
Sell Your Business
Another more radical approach to taking money out of your business is to sell your business. Selling your business will take all the responsibilities of your business completely off your hands in exchange for a huge lump sum of money. If your business has just recently come into a lot of success, you may be swimming in offers from competitors who want to buy your business from you. When faced with a great deal, a better one may never come up again. It is almost always smart to sell your business when you are offered an amazing deal for it.
The final and most simple way that you can take money out of your business. Simply by paying yourself on your business payroll, or by taking and owners draw out of your business you can simply take these profits and they will be subjected to income tax on your personal tax returns. If your company is an S corporation, however, you will be paid through the net profits of the S corp, which is not taxed for social security or medicare withholdings. Then your profits after that are taxed as regular income.
Taking money out of your business is not as easy as putting money into it. But if you keep track of it and know what you are doing, then getting money from your business when you need it can be a breeze. Make sure you understand the similarities and differences between these different options to get money out of your business to decide what is best for you.
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