Are You Paying Yourself the Right Way? Salary vs. Distributions in Texas

Once your business starts turning consistent profit, how you pay yourself becomes a critical financial decision — not just an accounting detail.

Salary vs. Distributions

Business owners in Texas with S corp or LLC structures have flexibility in compensation. You can take a salary (taxed like regular income) or owner distributions (not subject to payroll tax). The trick? Striking the right balance. Go too low on salary, and the IRS might flag it. Go too high, and you’re giving away money unnecessarily.

What’s “Reasonable”?

Every industry has benchmarks. Working with an advisor ensures your compensation aligns with both IRS standards and long-term goals. It’s also an opportunity to optimize cash flow, retirement contributions, and tax liability.

Unsure if you’re paying yourself the right way?

Let’s review your structure and create a custom payout plan that works for your business.

Book a compensation checkup now.