Just answered the question to a group that I belong to..
How much should I pay myself?
Should I pay myself if I am the owner of the business.
Paying yourself most definitley YES!
HOW MUCH? ...Depends...some things to think about BEFORE you give yourself a salary!
My clients and students often do one of two things:
1. They do not figure their salary needs at all in the business.They will take their salary from the "profits" . Yet rarely is their enough profit to take a salary and quickly put their personal credit and home life in jeopardy.
2. Or they pay themselves a ridiculous amount and take all the money out of the business and put the business in jeopardy
A REASONABLE SALARY is a MUST! What is reasonable?
My answer to students and clients is:
1. How much is your personal budget? What do you need to take out of this business to make sure your personal commitments are taken care of? It makes no difference whether you have a partner or spouse who is "willing" to pick up the budget...while you are starting the business...you must have your salary amount in as part of your costs.
2. What would have to pay someone to do your job? It usually isn't any small amount.
3. Paying yourself is part of establishing your costs so you can give price your product or service accurately.
4. BTW...supporting you and the business usually does not last long and resentment quickly rears its head. Plan to contribute from day one...it eliminates a good deal of family problems. You can start low...but start and raise it as you go..
I hope this people thinking of what salary they need to take out of the business. Check out my blog www.empressofbiz.blogspot.com for more comments on small business.
Business Tips from the Empress of Biz Host, JoAnn R. Forrester, Award Winning Serial Entrepreneur, Business Growth Specialist, Financial Mentor and Small Business Women and Minority Business Advocate.
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