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jross1801
Level 3

Do I need to pay myself a salary in a side business?

I have a side business that grosses about $50k/yr and nets about $20k/yr.  Since I have my main/normal W-2 job (~$100k/yr) with my employer, do I need still need to take a small salary with my side business?  Or, am I fine to just take it draw given I have W-2 income from the other?  

 

Thanks very much. -JR

2 Comments 2
TirzahC
QuickBooks Team

Do I need to pay myself a salary in a side business?

Hello,  jross1801.

 

QuickBooks Self-Employed (QBSE) tracks your income and expenses from your self-employed work only. 

 

If you work for someone as an employee, ensure to ask them a copy of your W-2 when the year ends. This way, you'll be able to see your total earnings and how much was withheld for taxes and sent to the government.

 

Whereas, when you work for someone as an independent contractor, your client usually don't withhold taxes. It means you cover all of your own withholding and pay for taxes. Your 1099-MISC includes your total earnings since no taxes were taken out.

 

For more information, you can check about filing taxes when you have both 1099-MISC and W-2 income.

 

More details about this can be found on below articles:

 

 

If you need assistance in the future, feel free to go back to this thread. I'll be more than happy to lend a hand.

jross1801
Level 3

Do I need to pay myself a salary in a side business?

Not what I was asking.

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