Whether you’re an influencer on YouTube, TikTok, Instagram, or Patreon, you may be asking: How do I pay myself now that I’m making real money online? You’re not alone. Most digital creators start with side income, but once content becomes a career, you need to run your finances like a business.
Here’s your guide to paying yourself the right way, staying compliant with the IRS, and avoiding costly tax surprises.
Paying Yourself as a Sole Proprietor (No LLC or S-Corp)
If you haven’t formed a legal entity yet, you’re likely a sole proprietor by default. In this setup, you pay yourself by taking owner’s draws directly from your business bank account.
What to Know:
- These draws aren’t subject to payroll tax withholding, but you are still responsible for self-employment tax (15.3%).
- You must track income and expenses carefully to calculate quarterly estimated taxes.
- IRS Form 1040 Schedule C is used to report income.
Important: Even though you can transfer money freely, this isn’t “free money.” It’s taxable.
Paying Yourself with an LLC
Forming an LLC gives you legal protection but doesn’t automatically change your tax structure. By default, a single-member LLC is taxed the same as a sole proprietorship.
That means:
- You’ll still take owner’s draws
- You’re still responsible for self-employment taxes
- You’ll file a Schedule C with your personal tax return
The benefit? Liability protection and a more professional appearance for brands.
Paying Yourself in an S-Corp (Tax-Efficient Option)
If your influencer business is netting more than ~$50,000/year, you may benefit from being taxed as an S-Corporation.
Here’s how it works:
1. Pay Yourself a Reasonable Salary
You’ll be an employee of your own company. The IRS requires that you take a reasonable salary via payroll. This salary is subject to:
- Federal income tax withholding
- Social Security and Medicare (FICA)
2. Take Additional Distributions (aka Owner’s Draws)
Beyond your salary, profits can be distributed to you as shareholder distributions—not subject to self-employment tax.
3. File Payroll Taxes
You’ll need to run payroll and file:
- IRS Form 941 (quarterly)
- IRS Form W-2 at year-end
This setup can save thousands in self-employment tax, but it requires more structure and compliance.
What About Estimated Taxes?
Regardless of structure, you may need to make quarterly estimated tax payments to the IRS and your state.
Key Deadlines:
- April 15
- June 15
- September 15
- January 15
Use your profit and loss statement to estimate your net income and calculate what you owe. Polaris Tax & Accounting helps clients build custom tax plans to avoid underpayment penalties.
Don’t Mix Personal and Business Funds
Open a separate business bank account—even if you’re a sole proprietor. This simplifies tax reporting, protects deductions, and helps you pay yourself intentionally.
Use a system like Xero or QuickBooks to manage your books. Or better yet, let us handle it for you.
Summary: Which Payment Method is Right for You?
| Structure | How You Pay Yourself | Tax Considerations |
|---|---|---|
| Sole Proprietor | Owner’s Draw | Self-employment tax, no payroll needed |
| LLC | Owner’s Draw | Same as sole proprietor unless S-Corp elected |
| S-Corp | Salary + Distributions | Must run payroll; reduced self-employment tax |
Need Help Paying Yourself the Smart Way?
At Polaris Tax & Accounting, we help influencers:
- Structure their business properly
- Stay IRS-compliant
- Save money on taxes
- Automate bookkeeping and payroll
Explore our influencer services:
Accounting for Influencers and Content Creators
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