Can receive salary as sole proprietor
Salary workers versus salary sole proprietorships - questions
Dear Sirs and Madames,
I would like to briefly describe the starting point for my question. My father and I started a company in the social sector 5 years ago. Although he is actually the founder, since he runs the sole proprietorship as a freelancer and I am employed. We are a family company and always wanted to see each other as equal, even if I am still considered an employee. We both agreed that we've had the same salary for the past two years. In that case, he withdraws 4200 EURO per month via a private withdrawal. It looks a bit different for me, because my 4200 EURO are net and there is still gross & plus; Employer's contribution to be added. Until recently, this had never been a problem or issue. I can't really do anything about the additional costs for my net salary.
I work with slightly rounded numbers here. But now he says that he only has 4200 EURO & plus; 800 withdraws health insurance and thus withdraws or costs 60,000 EURO per year from the company. Now he is countering my salary of 7800 EURO as additional company costs, i.e. with the gross and employer's contribution. So no longer the monthly 4200 EURO that I have net in the account, as it is with his 4200 EURO private withdrawal. He extrapolates my 7800 EURO over 12 months and then comes to an annual cost of 93,600 EURO for me. Now he compares his annual costs of 60,000 euros with my annual costs of 93,600 euros and is of the opinion that I would cost the company significantly more per year. He also counts my wife's annual salary & lpar; also works for us & rpar; plus 29,000 EURO. He now says that we both cost him 120,000 euros a year and that his withdrawal of 60,000 euros is nothing. My mother doesn't work in the company herself.
E is bad enough that we are compared here by a family company and here actually so. But now I have countered him that he actually expected more expenses per month. He has already added solos, church tax, health insurance and he does not pay in unemployment, long-term care and pension insurance voluntarily. In his case, it is no longer worth it, as he will retire in 3 years. I also told him that every employee has to pay wage tax and that as a sole proprietor he has to pay income tax. You can compare the two with each other, right? Employees = wage tax and entrepreneurs = income tax. But he is of the opinion that as a private person he has nothing to do with it. Income tax only affects the company and not him.
What I'm actually getting at here is that he not only got the 4200 EURO salary & plus; Withdraws 800 EURO for health insurance, but just like me, with gross and employer's contribution, withdraws more monthly from the company. In my opinion, he does not calculate my additional costs for him in addition to his salary as a further monthly expense. But I see it differently, because I can't help these additional costs and take them for granted. He is of the opinion that he is at a disadvantage because the company costs less per month than me and my wife together. Since our tax advisor is on vacation for 2 weeks and I just can't let go of this topic, I turn to the forum here and ask for help.
In our last BWA from September, I can see exactly how high the private withdrawals were from January 2019 to September 2019. I don't have more BWA's for 2019 yet and have therefore used these 9 months as an example for him. My example of its monthly cost then looks like this:
1. Salary 4200 net on his account
2. 800 EURO KV
3. 90 life insurance
4. Everything he runs through the company
5. Other private names
That was 72,000 EURO up to September 2019. Of course, I'll deduct the salary from that until September. That is then 72,000 EURO private withdrawals minus 37,800 EURO salaries until September = a difference in further private withdrawals of 34,200 EURO until September. If I calculate down as the monthly average for the new months, then I come to an additional monthly sum of EUR 3,800
6. Income tax
There is no sales tax in our case, as it is a social institution.
This is a very rough calculation and certainly not everything is really correct. But now we come to my concern. I would like to discuss this topic with him again on Monday because it just won't let me go. Since we incur more costs than he does, he wants to correct his salary upwards so that, like us, he has more money available every month. I need reasonable reasoning for our conversation. In very simple words, an argument that shows him that he not only costs the company 4200 EURO per month, but also that there are additional costs for him on top of the 4200 EURO per month. My wife and I have our net money in our account and we don't have a car through the company, we don't refuel, we pay insurance ourselves and we don't take any more money from the company.
A degree is required so that I can manage the company myself in the future. I am currently studying and the company pays for these costs of 300 EURO a month. For me it goes without saying. But he also added this amount as an additional cost of 3600 EURO. Words just fail me. Our tax advisor once said a long time ago that it costs around 120,000 a year. That would be comparable to what my wife and I cost him a year. I think it's bad to talk about costs in the family.
Can you help me here for the conversation on Monday? Arguments, a few rough figures, what's wrong with his calculation. Or am I not right there? Since I am only an employee and he is the sole trader, I am very aware of that. But we brought the thing upstairs together and I should come into the company at some point. I find his calculation very hurtful.
- Edited by pal406193-23 on 02/01/2020 12:43
- Edited by pal406193-23 on 02/01/2020 12:49
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