It depends on how your set up. When I was a DBA essentialy I paid myself everything. Once I incorporated I starting paying myself a salary and then takeing the rest as a draw when needed. This allows you to control how much you want to pay in SS tax and Medicare. Your fed and state will allows be based on your net income overall.

 

Just my personal advice (not speaking from experience because I don't have any), but I've come close to starting a business and I'm in the process of trying to start another (both are eCommerce businesses). In both instances, I decided it would be best to roll all of my profits straight back into the business -- specifically, marketing. This is, of course, because I don't currently have any living expenses as I'm still in high school and living at home. In your case, I would just take out the bare minimum you need to get by, or just enough to make it seem worth your time.

Before you begin, I recommend coming up with a target number for when you can begin to really reward yourself for the hard work. Once you reach this point, you can start to spend on yourself, but still monitor what you're doing. You wouldn't wanna piss all of your hard work away now, would you?


Again, just my $.02.

 

Yankees, you sound very well-spoken and mature for a 16 year-old; props

 

Again, how is this business set up ?? Is it a sole proprietorship, is it an LLC, is it a S-sorp. Can't really answer your question until I know how your set up.

 

Thanks! That's what sitting in front of the computer for 5 hours a day does to ya! I only really take breaks for baseball games and special activities that really peak my interest...okay, okay. I'm not that big of a loser. I just enjoy this stuff.

 

As a sole prop. your basically paying your self everything and will also pay taxes on everything you make after expenses including SS tax and Medicare. If your starting to make a decent amount of money I would suggest incoporating.