We are set up as a pass through business. Our shareholder draws are reported to the IRS through our personal tax return. As it was explained to us, " When a pass-through business earns profits, it does not directly send a portion of the profits to the IRS. Instead, the profit is "passed-through" the business and onto the tax return of the business owners. We as owners are then responsible for paying the tax to the IRS, meaning that the pass-through business pay individual income taxes at the individual tax rate, not corporate income tax" We also pay self employment tax.
Now with the current event going on we chose not to pay out any draws at all because we can't afford to pay ourselves.
If we choose to switch to pay ourselves as employees with a salary and payroll, at this time we could not afford that as well. We are currently keeping our business afloat.
