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My sixth year as a bootstrapped founder

(mtlynch.io)
1071 points mtlynch | 1 comments | 16 Feb 24 15:07 UTC | HN request time: 0s | source
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ein0p ◴[16 Feb 24 16:47 UTC] No.39399519[source]▶
FYI: You can’t “not draw a salary” and get that profit out of the company. IRS mandates that you pay yourself a reasonable amount, and pay (eye watering amounts of) taxes on that amount. You can’t circumvent any of that by just taking everything as distributions.
replies(2): >>39399540 #>>39399630 #
tgtweak ◴[16 Feb 24 16:55 UTC] No.39399630[source]▶
I don't think there were any insinuations that that was after-tax income in his personal bank account - just that the company earned that much in the previous year and it could be paid out (dividends or otherwise) after much in the way a gross salary would be.
replies(1): >>39399822 #
1. ein0p ◴[16 Feb 24 17:08 UTC] No.39399822[source]▶
For single person LLC (as the OP said) it doesn’t make any difference - they’re paying all taxes on the entire amount and then just deducting business expenses. IOW their business account does not require any special treatment. For corps (including S corp) there’s often this temptation for the founders to pay themselves the bare minimum and skirt some of the taxes (social security for example). I was pointing out that this is a good way to draw unwanted attention.