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How Much Should I Pay Myself? September 26, 2009

Posted by Julie Duriga, CPA in Uncategorized.
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j0438379Since there is so much interest in my previous blog post, “How Do I Pay Myself?” I thought it would be fun to write to entrepreneurs to answer the question to “How Much Should I Pay Myself?”

Unfortunately, the answer is almost always this:  “The owner gets whatever is left over…”  Your employees have to be paid first, your rent must be paid first, your telephone bill…these are all things that you need to stay in business.  Unfortunately, for various reasons, most small business owners don’t make enough money their first few years to make a formal salary for themselves.

We will say that this is an excellent reason to do reasonable, conservative cash flow projections.  Your cash flow projections for your small business will tell you how much you should pay yourself and will tell you what is left over after meeting all of your expenses.  Projections are a critical part of the business plan because they tell us if we are marking our stuff up enough, if our overhead is too high, what are the quantities that we have to sell in order that we may break even and end up with enough profits to have a salary.

The second part of the cash flow business projections is to really know how much does it cost you to live.  Sometimes, when small business owners are running their cash flows for their business, they forget that they have to make paying themselves a priority.  Ideally, you want to have profits and a salary! 

Visit us at our website to get your free E-Book titled “How Do I Pay Myself? The Entrepreneur’s Guide to Building a Business AND Bringing Home the Dough.”  www.UniversityForBusiness.com

We also offer a really cool twenty minute video about how running your business affects your bottom line. We use islands, cars and bridges to demonstrate the movement of profits and losses between your personal and business bank accounts. This immediate download is avaialble for only $6.99. Twenty minutes with a CPA for only $6.99, what a deal!



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