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Plus, the truth about owner pay, LLCs, and branded swag.
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In partnership with
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Business tax myths are great at disguising themselves as facts. And if you hear one often enough, questionable tax advice suddenly starts sounding like a perfectly reasonable business strategy.
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This week, we’re putting three of them to the test: how you pay yourself, whether an LLC really comes with tax perks, and just how much magic that logo of yours can really perform.
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🖋️ Being the boss is great until it’s time to figure out your own paycheck.
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🚫 You formed the LLC, so where are the automatic tax breaks?
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👕 Some swag gets a deduction, and the rest just gets a logo.
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Follow us for even more great tips, tricks, and deadline reminders.
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The Basics
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🖋️ Put the checkbook down before you pay yourself
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The Quick & Bristly: There isn’t a universal payday rule for every business owner. Sole proprietors can take personal withdrawals, partners may receive distributions or guaranteed payments, and S corp shareholder-employees generally need to pay themselves a reasonable salary.
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Paying yourself should be one of the perks of owning a business. You make the money, write yourself a check, and you’re done. Except the IRS doesn’t see it that way. How you pay yourself depends on how your business is structured, and if you get it wrong, it’s going to cost you.
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Are you actually an employee?
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As it turns out, owning the place doesn’t automatically put you on payroll. Before you decide how to pay yourself, start with one important question: are you an actual employee of your business?
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If you’re a sole proprietor, the answer is no. Partners generally aren’t employees of their partnerships, either.
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Corporations are different. Corporate officers who perform services for the business and get paid (or are entitled to payments) are generally employees.
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Not every payment is a paycheck
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So, if you’re not an employee, how exactly do you get your money without feeling like you’re stealing from your own business?
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Sole proprietors can just take the money out of the business for personal use. The IRS treats that as a personal withdrawal, not deductible wages. And here’s the kicker: you’re taxed on the business’s profit whether the money makes it to your personal account or not.
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Partners can receive distributions and guaranteed payments (in some cases). Those aren’t employee wages, either.
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This sounds convenient and all, but there’s a catch. There’s no employer withholding taxes from your payments, so you may need to make estimated tax payments and pay self-employment taxes. Just another perk of being the boss.
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Then, if you aren’t confused enough, add LLCs to the mix.
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Single-member LLCs are treated as sole proprietorships by default for federal income tax purposes.
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Multi-member LLCs are treated as partnerships by default.
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LLCs can also elect to be taxed as a corporation (including as an S corp).
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How you pay yourself depends on how your LLC is taxed, not just the fact that you have an LLC. Did you really think the IRS would make it that easy?
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But for some business owners, an actual paycheck is required – and you don’t get to just pick a random number to pay yourself.
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➡️ Find out when the IRS gets a say in your salary
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When someone asks AI what to buy, be the answer.
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The Deep Dive
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👕 A logo doesn’t make it a business tax write-off
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The Quick & Bristly: Branded promo items and vehicle wraps can be deductible when they serve a real business purpose, but a logo alone doesn’t make an expense deductible. Pricey client gifts are capped at $25 per person per year, and personal use of a wrapped vehicle or logo apparel isn’t deductible.
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Slapping your logo on something can be a strategic marketing move. But if you were banking on using your branded merch for a big tax write-off, put that order for 10,000 hoodies and a vehicle wrap on hold. There are a few important tax rules you need to know.
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Some swag makes the cut
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Promotional items can absolutely count as legitimate advertising expenses. So go ahead and put your name on 500 pens to give out at a trade show. T-shirts, banners and other goodies may count, too.
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But while these low-cost branded items can be written off as advertising expenses, expensive items – even if they have your logo on them – are a little different. If you give a client a pricey item, you may be treading into business gift territory, which comes with a pretty stingy $25-per-recipient annual deduction limit.
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Not every company shirt is a uniform
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So, promotional swag is a potential write-off, and pricier items may fall under IRS gift rules. But what about your employees’ gear? Or even your own?
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An employee’s T-shirt or polo isn’t automatically deductible because your business name is embroidered across the chest. However, clothing that’s required for the job and is unsuitable for ordinary everyday wear may qualify as a business expense. This means a true uniform or protective gear – like scrubs, firefighting gear, or mechanic’s coveralls – not the hoodie you wear for your Saturday morning coffee run.
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The wrap is advertising, but your Target run isn’t
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The same rules apply on a larger scale. If you want a vehicle wrap on your SUV to advertise your business, go for it. You may be able to write it off as an advertising expense, but it doesn’t automatically turn every mile into a business trip.
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So, if you drive your wrapped car to meet a client, this is potential business use. But your trip to Walmart for toothpaste and throw pillows is still personal, even if you are doing it in a rolling billboard.
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The logo isn’t the deciding factor
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This is really the rule to remember: A logo can support a legitimate business purpose, but it can’t create one. Before claiming a business tax write-off, ask yourself why you bought it in the first place. If the answer is advertising, promotion, or another business purpose, there may be a deduction there. If it’s just something you wanted that happens to have your logo, maybe leave that one off the return. And if it is deductible, always keep the receipt.
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Your logo can do a lot for your business, but it can’t turn personal expenses into business deductions.
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Ready to start your business?
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Let Inc Authority remove one more hurdle! Register your free LLC today, just pay the required state fees (which are tax deductible!).
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🎧 Listen: “Can I Claim That?” The Tax Misconceptions That Create Big Headaches” — Taking Care of Business Podcast. Tax rules leave plenty of room for assumptions, and you know what they say about assuming. This episode clears up common tax misconceptions before they become expensive mistakes.
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📖 Read: “24 Small-Business Tax Deductions to Know in 2026” — The internet has plenty of creative ideas for lowering your tax bill. Skip the ones that sound too good to be true, and check out Nerdwallet’s list of 24 legit tax deductions.
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