As a sole shareholder of an S-corp, you can pay yourself in two ways:
- Salary: You must pay yourself a reasonable salary for the work you do for the business. This salary is subject to payroll taxes and income tax.
- Distributions: You can also receive distributions from the S-corp's profits. Distributions are not subject to payroll taxes, but they are subject to income tax.
As a sole proprietor, you simply take withdrawals from the business. Withdrawals are subject to self-employment tax and income tax.