One of the reasons people go into business for themselves is so they have control over what they can earn. However, when I ask business owners if they are paying themselves the number of times I hear “no” shocks me. I have explained the reasons WHY you need to pay yourself (if you missed it you can check it out here) and now I want to tell you HOW to do that.
There are a few different factors to account for when looking at what your salary may be. You need to consider the stage your business is in and take into account any sort of expenses, taxes employees, or team members you may need to pay before yourself.
If you’re in the starting phase of a business, what you’re able to take home now will be different than what it will be once your business is more established and bringing in more money. It’s important to have a clear (and organized) budget so you understand what money is coming in and what is going on. Have a detailed list of all expenses and tax obligations. Once you have a picture of what your business will be bringing in and what you will need to pay out, you can look at the rest and from there figure out a reasonable salary to pay yourself. This number may seem smaller than you would like at first, but it’s good to be conservative at the start until your business is bringing in consistent money.
Once you’ve determined your expenses and picked a salary that works within your business budget, it’s now time to choose a payroll schedule. Consider how often in the month you want to be paid. Weekly, monthly or bi-weekly. Set up and stick to the schedule. This will also help if you decide to bring on an employee or team member.
When you have all of these things in place, it’s time to get paid. The best way to do this would be to transfer the funds from your business account into your personal account.
Paying yourself from your business is a big deal. It’s not just money you’ve earned, it’s money you have earned from an idea you have created and brought to life. Remember that at the beginning it may only be a small amount that you have leftover to pay yourself but STILL do it. Get in the habit and as your business grows so will your amount that you pay yourself!
