Hello,
In general, a sole proprietor can take money out of their business bank account at any time and use that money to pay themselves. If the business is profitable, the money in your account is considered your ownership equity and is the difference between your business assets and liabilities. This type of transaction isn't considered a salary, but rather a "draw." To perform a draw, you would write a business check to yourself.
This check is not subject to federal income tax, state income tax, or FICA taxes.
That's because the IRS treats the business’s profits and a sole proprietor's personal income as the same thing. In other words, after you’ve deducted business expenses on Form 1040 Schedule C (for sole proprietors) or Form 1065 (for partners), the remaining profit is considered personal income.
However, you only file your personal income tax return once a year, and you may want to pay yourself on a more consistent basis. To do so, you'll need to look at financial projections (if you've just launched your business) or past financial performance (if you’ve been in business a while) and estimate your business's profits. Based on that number, you can set up a consistent salary for yourself. That would require filing quarterly payroll tax returns and withholding income taxes and social security and medicare taxes.
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