At the moment when it is decided to undertake, the idea of obtaining profits immediately and in large quantity, strengthens the decision to start this project. Well, unlike continuing to receive a limited salary as an employee in some other company, to be the owner of your business you plan to be free to use your earnings in a way you prefer and want.
But once you face the reality of entrepreneurship, two things can happen. The first, that due to the financial situation of your business you can not set aside an amount that represents a salary, since the expenses are too many and you can hardly cope with them. (If you are in this case, the ideal is to optimize the use of all your resources to improve the performance of your small or medium business.)
The second and on which we will focus, perhaps it is, that you really have not thought that fixing a salary as owner is necessary. But you must take into consideration that once you define it, you will be helping your business finances to be stable and under a control that allows you to grow it.
Then we will start with the way you should calculate it and then we will mention the benefits of paying a salary.
How to calculate your salary?
It is necessary to clarify that to calculate your salary as owner depends very much the industry to which you dedicate yourself and the stage in which your business is located. But the factors that you must analyze to determine an exact amount are the following:
Comparison of salaries
To begin to give you an idea, you can start by investigating how much someone who does the same job as you is earns. You can take the approximate of what most of the companies that seek people from the position or positions that you perform within yours list.
Setting aside a certain amount of your earnings for your salary will undoubtedly apply certain adjustments to your accounting. So you can help your accountant to take advantage of the best way tax deductions , shareholder distributions (if any) or tax benefits to have a margin greater than the amount you could allocate.
It is essential that you take into account the flow of money that your business has, and the financial status you have so far. Analyze the profits, income and expenses that are held per month and year. After this you will know how much your own business can pay for your salary.
If the stage in which your business is growing , you may decide to be more reasonable to set your pay. Since under this situation, you may need to take up all your working capital to settle the new expenses that arise with this. Although also for this case, there is the option of requesting a credit or loan specifically to use it in the growth and thus conserve your liquidity and earnings.
So … How much should you pay?
Once you have this financial analysis by your business and the activities you carry out in it, it includes the staff. That is, make a new one in which you include all the personal expenses you have, rent, house, car, food, services, etc. Do not forget each of the things that are necessary in your day to day, so you will have the exact amount of what your salary should be.
After having both analyzes, you can make the decision of the figure that will represent your first salary as owner. Well, you must think both your business and your person, always trying to balance both sides so that the results are positive.
Benefits of setting yourself a salary as an owner
Having a salary as an owner, also ends up helping the financial status of your business is not affected if you had the idea that all profits belong to you to solve your lifestyle and personal expenses. Well, although in a certain way if they are yours, the best thing for a business that emerges from entrepreneurship is that it has a long-term growth goal, in which the profits intend to be reinvested towards this objective.
Vision and motivation
In addition to the effort, time and money that you also put for your business to operate, when you set a salary you are already compensating for this. And at the same time, you acquire a vision of commitment for goals that keeps you motivated. That is, the more business opportunities you close or attract your company, you will have greater profits, therefore you can raise your salary and the growth of your business.
Pay your effort!
Although there is no exact formula that tells you how much you should earn as the owner of your business, making that decision will positively help your business and the desire that you want to continue with it. Keep in mind what you want to achieve and how far you get.