6 Ways to Take Money Out of Corporation

One of the bigest confusions I see in corporate bookkeeping is how you can take money out of the corporation. So I've complied a very basic list for us to refer to.

(1) Repayment of a loan to the corporation. This is not taxable to the stockholder. The stockholder should have reported interest earned and the corporation should have taken an interest expense deduction.

(2) As dividends paid by the corporation. Dividends are profits split among the shareholders proportional to the number of shares each stockholder owns. For example, a company has $100 to pay in dividends, if one stockholder owns 40% of the stock, he should receive 40% of the dividends or $40. See dividends for more information on them.

(3) By selling some of his stock back to the corporation. This becomes Treasury Stock to the corporation (as opposed to Common Stock) and is not taxable to the sharehold if he receives the same amount per share as the amount per share for which he originally bought the stock.

(4) As salary. The salary amounts are not dependent upon the number of shares owned. For example, if two shareholders each owns 50% of the outstanding stock, it is not necessary that each get identical salaries. Bonus payments would also fall under this category. This is taxable as payroll and the corporation must pay liabilities on the amounts paid.

(5) Theft or embezzlement. This is taxable to the shareholder as he is caught.

(6) As a loan from the corporation. In this case there should have been loan documents drawn up and signed by both the stockholder and a corporate officer. The corporation will record periodic interest earned and the stockholder may be able to take interest paid as a tax deduction.

There's abunch of other things that people think they can take out of a corporation, but they can't. Partner "draws" are one of those things.

Reimbursements are not wages or money taken out, they are corporate expenses being paid in advance by an individual. So the reibrusement is not taxable and does not fall into this category.

Please note: this is a beginning only. This does not create a reliance of any kind.

No pricing policies

There's an exciting trend in allowing people to "pay what they can." CNN has an article about Sam Lippert taking prices off of his menu.

Cafe Gratitude's Workshops are being offered in pay it forward style. It's so exciting. This idea allows for a wide variety of people and styles, allowing some people to pay more than they might otherwise and some to pay less.

It also has the advantage of bringing in more business to the establishment and class.

Business Practices and Emotional Clarity

This weekend I went to Cafe Gratitude's Sacred Commerce workshop.

It was both informative and a lot of fun.

They use components of NVC (non-violent communication) to help people really hear and be heard - critical to make sure your work with clients and employees is clear, effective and efficient.

This workshop is taught by Matthew and Terces Engelhart, the founders of Cafe Gratitude. They have clearly studied a lot of personal growth work from NVC to meditation and gratitude practices. The workshop itself is about how to clear out what's keeping you from being present so that you can be at work and not be carrying emotional baggage into that or any space. In fact they take it beyond being present into being grateful. It's a great idea and it really works.

Cafe Gratitude spend about $230,000 a year on this process. They employ more than 200 people and every morning they do this process with each employee from District Managers on down to dishwashers. Each person sits with someone and goes through the process of getting present and shifting into gratitude. Every day.

And they are profitable. That's the key here. This is a business who consistently turns a profit with sustainable business practices. They wrote a book about this process and other aspects of how they run their business called "Sacred Commerce" which you can also find on their website.

Not only that, but they have started a practice of making their work more widely available by using a model of pay it forward. You go to the workshop and get value from it and decide what it's worth and then pay for the next person to be able to get that same seat next month. I paid for my seat so that you can go. Enjoy!

To me Cafe Gratitude is a clear and exciting example of how business can work in alignment with their values and do amazing things in the world.

Small Business Administration Deals Blow to Women-Owned Businesses

Since many of my clients are small business owners, those who want to be or those who have been (with small business are those with less than 500 hundred employees) I thought this would be of interest.

One of the findings of the SBA has been that even though women-owned business make up 30% of small businesses they receive only 3.4% of the federal contracts. That's not a big surprise for many reasons. It's still not an equitable playing field for women and minorities.

What is a surprise or a sadness really is that the SBA would try to get rid of legislation that supports equalizing the playing field and supporting all people in running successful businesses. Especially in this economic climate where the government is encouraging spending to increase liquidity in the banking and monetary systems.

You can read more about it here