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Earning a wage from the B&B

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JunieBJones (JBJ)

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What do you actually consider your earnings from the B&B? Do you pay yourself a salary? Or is it anything left in the account after the bills are paid?
Profit? Revenue?
I know we had shared some worksheets and info on this subject on the old forum, I thought it might bring up some good info for the new year.
 

gillumhouse

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I am at a different stage of life. Paid? Huh? People get PAID?
For me this IS a business in that I do not consider it a "lifestyle" because I am always looking for ways to improve the business but at the same time, am usually plowing the money back into it to make it better. Our daughter sent us a gift card for Christmas and I think she is disappointed we did not use it for something for "us" but does not realize that the cordless sweeper we got IS for us because it makes life better. My pay is to get to live in this house and do the things I want to in this city and the people I get to meet. I know it does not build a bank account, but at my age a bank account does no good. I am not trying to put kids through college and travel is something I can no longer look forward to - for now.
and because my business was so successful this year, I am not playing catch-up in 2009 (as I did in the forst 6 months of 2008). My earnings are discovered when my tax preparer tells me if I made money or broke even or in the hole.
 

Morticia

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We don't get paid. If there is any money in the kitty at the end of the year, it goes right back into the business. So, our 'earnings' are whatever is leftover after expenses. That's what we get taxed on personally, even tho we don't spend that money on ourselves directly. Obviously, keeping up the building gives us a place to live. Having the business pays some of our expenses, but not all of them. For that we have disabilty payments from the VA and half a pension.
 

gillumhouse

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We don't get paid. If there is any money in the kitty at the end of the year, it goes right back into the business. So, our 'earnings' are whatever is leftover after expenses. That's what we get taxed on personally, even tho we don't spend that money on ourselves directly. Obviously, keeping up the building gives us a place to live. Having the business pays some of our expenses, but not all of them. For that we have disabilty payments from the VA and half a pension..
We rely on SS & my pension for expenses that are ours. It was only when he reached retirement that DH seriously saw the benefit of a pension (he worked for small companies that had pleasant working conditions but no pension). I worked for the behemoth for the insurance and the benies and tolerated the crap that comes with behemoth.
 

muirford

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We call it income and it pays our living expenses - health insurance, taxes, food, clothing, incidentals. We run the business as a sole proprietorship and what's left after expenses and depreciation is income. Not to be confused with cash flow, since depreciation doesn't affect cash flow. We have a business that supports us - no pensions or social security.
 

muirford

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?
 

EmptyNest

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See most "classes" would tell you to PAY YOURSELF....which is great in theory..but I don't know anyone who does.Thankfully I have a great retirement plan and we didn't have to make any money from the B & B.
 

EmptyNest

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
Yes, I agree. But some folks who taught aspiring classes I attended have said you should "write yourself a monthly pay check" They said it...Not me...
 

Morticia

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
muirford said:
I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?
We include things like the mortgage & property taxes in the expenses, otherwise we'd have to pay personal income tax on it. We buy our own food with the 'pension' money, pay our dr bills, etc. Ditto clothing and vacations, electricity & phone. Any utilities that are separated out for each side of the building, we pay our share from the pension.
Health Insurance is covered by the 'company' we 'work' for.
I still don't feel like I get 'paid' because I have no spending money from the business. Plus, if we wrote ourselves a check each month we would have to also pay all of the taxes associated with that (FICA, et al) and workers comp.
 

gillumhouse

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
muirford said:
I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?
We include things like the mortgage & property taxes in the expenses, otherwise we'd have to pay personal income tax on it. We buy our own food with the 'pension' money, pay our dr bills, etc. Ditto clothing and vacations, electricity & phone. Any utilities that are separated out for each side of the building, we pay our share from the pension.
Health Insurance is covered by the 'company' we 'work' for.
I still don't feel like I get 'paid' because I have no spending money from the business. Plus, if we wrote ourselves a check each month we would have to also pay all of the taxes associated with that (FICA, et al) and workers comp.
.
When I am out and about - usually provisioning for the B & B, the only monetary power I have in my possesion is the B & B checkbook (what is cash?). If I need something personal, I write the check and put Owner's Draw on the memo line. An electrician (self-employed) that has been in business more years than I have been told me that is the way to do it and be totally legal.
 

EmptyNest

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
muirford said:
I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?
We include things like the mortgage & property taxes in the expenses, otherwise we'd have to pay personal income tax on it. We buy our own food with the 'pension' money, pay our dr bills, etc. Ditto clothing and vacations, electricity & phone. Any utilities that are separated out for each side of the building, we pay our share from the pension.
Health Insurance is covered by the 'company' we 'work' for.
I still don't feel like I get 'paid' because I have no spending money from the business. Plus, if we wrote ourselves a check each month we would have to also pay all of the taxes associated with that (FICA, et al) and workers comp.
.
When I am out and about - usually provisioning for the B & B, the only monetary power I have in my possesion is the B & B checkbook (what is cash?). If I need something personal, I write the check and put Owner's Draw on the memo line. An electrician (self-employed) that has been in business more years than I have been told me that is the way to do it and be totally legal.
.
That sounds reasonable. We just always kept separate checking accounts for us ..one for business and one personal.
 

gillumhouse

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
muirford said:
I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?
We include things like the mortgage & property taxes in the expenses, otherwise we'd have to pay personal income tax on it. We buy our own food with the 'pension' money, pay our dr bills, etc. Ditto clothing and vacations, electricity & phone. Any utilities that are separated out for each side of the building, we pay our share from the pension.
Health Insurance is covered by the 'company' we 'work' for.
I still don't feel like I get 'paid' because I have no spending money from the business. Plus, if we wrote ourselves a check each month we would have to also pay all of the taxes associated with that (FICA, et al) and workers comp.
.
When I am out and about - usually provisioning for the B & B, the only monetary power I have in my possesion is the B & B checkbook (what is cash?). If I need something personal, I write the check and put Owner's Draw on the memo line. An electrician (self-employed) that has been in business more years than I have been told me that is the way to do it and be totally legal.
.
That sounds reasonable. We just always kept separate checking accounts for us ..one for business and one personal.
.
We also maintain separate checking accounts - that is why I said in my possession, DH usually has the family checkbook in his area which does not help me when I am 10 miles away doing the shopping. Owner's Draw rarely gets used, but it works when needed.
 

swirt

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
Yes, I agree. But some folks who taught aspiring classes I attended have said you should "write yourself a monthly pay check" They said it...Not me...
.
I'm no tax person but I wonder if this advice is somewhat region specific. Example: NY has super high income tax so paying yourself would probably not be a good idea, while Florida has no state income tax so paying yourself might be a way to shift the money from some other category that might be taxed.
 

muirford

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
Yes, I agree. But some folks who taught aspiring classes I attended have said you should "write yourself a monthly pay check" They said it...Not me...
.
I'm no tax person but I wonder if this advice is somewhat region specific. Example: NY has super high income tax so paying yourself would probably not be a good idea, while Florida has no state income tax so paying yourself might be a way to shift the money from some other category that might be taxed.
.
I think you're right. Our inn is set up as a sole proprietorship, with DH as owner - and I draw a small (very very small) monthly paycheck in order to have a health care reimbursement coverage through the business. My monthly check is less than $20 - I have it all withheld for taxes, but then the business covers all of the costs for healthcare - insurance, prescriptions, etc. It is easier to do it this way than to take it as an itemized deduction and have to meet the minimums for income and % of expenses.
Profits on the inn are taxed as regular income (for us) by both federal and state entities. We pay property taxes on the house, with a portion charged out to us personally. We also pay all of those expenses out of the business account but use the owner's draw account so that it is noted as for personal use, not business. We occasionally write ourselves a check out of the business account if we need cash for our day-to-day living expenses, also against the owner's draw.
I understand about the business not paying all your personal expenses - our first two years here we drew on our own savings because we were given false information about the income level of the inn when we bought it and because we found more capital improvements and repairs that needed to be made right away, rather than after we fixed the business. The last four years have been different and we have a positive income and cash flow.
My point was that even though we don't 'write ourselves a paycheck', I feel 'paid' by the business because our personal expenses are covered by income/cash flow from the business, including the cost of a roof over our heads and food on our plates. And my magazine subscriptions.

 

Morticia

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I consider myself and DH to be paid from the Inn. The money that we have after expenses - our income - goes to paying the things that I would use a more typical salary to pay for - food, clothing, taxes, our share of the mortgage and property taxes, etc. Why isn't that the equivalent to paying yourself?.
Yes, I agree. But some folks who taught aspiring classes I attended have said you should "write yourself a monthly pay check" They said it...Not me...
.
I'm no tax person but I wonder if this advice is somewhat region specific. Example: NY has super high income tax so paying yourself would probably not be a good idea, while Florida has no state income tax so paying yourself might be a way to shift the money from some other category that might be taxed.
.
I think you're right. Our inn is set up as a sole proprietorship, with DH as owner - and I draw a small (very very small) monthly paycheck in order to have a health care reimbursement coverage through the business. My monthly check is less than $20 - I have it all withheld for taxes, but then the business covers all of the costs for healthcare - insurance, prescriptions, etc. It is easier to do it this way than to take it as an itemized deduction and have to meet the minimums for income and % of expenses.
Profits on the inn are taxed as regular income (for us) by both federal and state entities. We pay property taxes on the house, with a portion charged out to us personally. We also pay all of those expenses out of the business account but use the owner's draw account so that it is noted as for personal use, not business. We occasionally write ourselves a check out of the business account if we need cash for our day-to-day living expenses, also against the owner's draw.
I understand about the business not paying all your personal expenses - our first two years here we drew on our own savings because we were given false information about the income level of the inn when we bought it and because we found more capital improvements and repairs that needed to be made right away, rather than after we fixed the business. The last four years have been different and we have a positive income and cash flow.
My point was that even though we don't 'write ourselves a paycheck', I feel 'paid' by the business because our personal expenses are covered by income/cash flow from the business, including the cost of a roof over our heads and food on our plates. And my magazine subscriptions.

.
muirford said:
I feel 'paid' by the business because our personal expenses are covered by income/cash flow from the business, including the cost of a roof over our heads and food on our plates. And my magazine subscriptions.
The most important parts right there...yes, the roof over my head, which I would not be able to buy in this town if someone else wasn't paying my mortgage!
 

JunieBJones (JBJ)

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This comes up whenever I am filling out certian paperwork "Number of employees" ZERO actually. No paycheck, just income. There isn't a ZERO option, so I choose 1, which is myself as sole pty. So it is either zero or one.
 

gillumhouse

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This comes up whenever I am filling out certian paperwork "Number of employees" ZERO actually. No paycheck, just income. There isn't a ZERO option, so I choose 1, which is myself as sole pty. So it is either zero or one..
I have found that most forms asking Number of Employees state including you so I always answer with 1 (me).
 

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