For many small business owners in Raleigh, the idea of taking home a stable salary seems like a far-fetched goal, but it really shouldn’t be. While some entrepreneurs are happy to just take a portion of whatever is left after expenses, it’s still worth exploring what it would take to be able to take a salary. It shows that the business is stable and growing and will make the owner's personal finances easier to manage.
Here are some steps to paying yourself an entrepreneur’s salary:
Evaluate the financial plan of the business. To begin drawing a salary, it’s important that the business have strong finances. It should have a steady income and a strong projection for growth.
Know the details of the business. The company’s net income, the amount of debt still owed, upcoming costs and building savings are all important details to understand before even thinking about whether an owner can begin taking a salary for themselves.
Separate personal and business finances. Clarity and transparency is key. Keeping personal and company finances separately will make it easier to draw a salary. It’s hard to pay yourself from the same account.
Know your worth. Think about what the job entails and pay yourself accordingly. Also think about what would be needed to cover personal expenses.
Factor in taxes. Being an entrepreneur might have a different impact on taxes and withholding. Make sure you understand your unique corporate situation.
While many entrepreneurs think that their income is solely what’s left after all the bills are paid, it doesn’t have to be this way. Drawing a salary kicks the business into the big time. Sometimes it takes the help of small business experts, such as Raleigh Bookkeeping. We work with small businesses to help with bookkeeping but also coach their business towards growth. Contact us if you’re interested in setting up a financial plan for your business so you can draw a salary.