How much should a business owner pay himself? Is it a certain percentage, or a set dollar amount?
Posted by admin on Jun 7, 2008 in Other - Business & Finance |
thelastavenger34 asked:
I have a small computer repair/webdesign business in Oklahoma. I also manage at a pizza place, go to school and am a volunteer firefighter. I dont know how much of my business funds to pay myself in order to keep everything paid for, and still help the business grow.
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I have a small computer repair/webdesign business in Oklahoma. I also manage at a pizza place, go to school and am a volunteer firefighter. I dont know how much of my business funds to pay myself in order to keep everything paid for, and still help the business grow.
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Pay yourself an hourly, collect a paycheck from one business, and one from the other.
At the end of the year – you take a nice bonus from your end year profits.
I receive a salary as CEO and President of my company, plus receive quarterly dividends from my stock ownership in the holding company and various holdings in the subsidiary companies.
You don’t pay yourself anything until you calculate your net income. That’s your profit after all expenses. After you are sure you have a profit, you can dip into that for your needs, but don’t deplete it. Many business go belly up because the owner thinks because he worked hard he deserves a paycheck. You do not deserve a paycheck unless you have profit in hand. You don’t give yourself a paycheck based on income which is on the books, only income that is already in the bank. If you follow that rule your business will survive.