How Much Money Did My S Corporation Make

When business owners set up an S Corporation and creates a business entity, it is usually an accountant or bookkeeper (or both) that crank out the profit and loss statements for an S Corporation owner.   What can be confusing at the end of the year, because an S Corporation owner has multiple methods to receive cash through the business, is to actually figure out what you made in the business.   Taxes in many cases can be even more confusing to the S Corporation business owner.   Here’s a ‘your smart money moves’ breakdown to figure out just how much you made in your business. Salary- When you own an S Corporation, the IRS has salary guidelines on how much you should be paying yourself.  The IRS has created an outline of what’s called “reasonable compensation” that should be paid to the owner.    There are a myriad number of factors including industry averages, number of hours worked, and what is being paid ...

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How much should I keep in a cash reserve?

Building a solid financial plan is relatable to building a strong house.    If you create a secure foundation and structure for the house, it is likely to stand up against all of the elements over the course of the years to come.   Many financial plans fail because the two key areas of the foundation which include having an appropriate cash reserve and having adequate risk management protection are not put into place before people begin investing.   There are often various numbers thrown around in the media about what is an adequate cash reserve to have in your financial plan, but here are some thoughts for consideration on how much money to have in checking, savings, and other short-term investment instruments. The first question you should be asking is whether you are employed (and where your job stability is at work) or whether you are self-employed.    My opinion is that people who own a business should have about double the normal ...

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