Tips for Choosing Your Own Salary

Tips for Choosing Your Own Salary

You’ll have to make many decisions regarding your business, and all of these decisions require careful consideration. But while deciding what to pay yourself may seem like one of the easiest decisions you’ll have to make, once the time comes, it may be harder to nail down the right amount than you think. Consider the following things while deciding how much to pay yourself.

Although it may seem right or noble to not to take a salary, hurting yourself is not good for your business. You need to be able to pay your bills and survive in order to keep running your company. If your business isn’t making a lot of money yet, then start out by paying yourself what you need to get by. You can always give yourself a raise once more profit is being made.

When a business starts bringing in steady, decent revenue, many business owners choose to pay themselves a percentage, typically around 15% or less. It’s important not to drain the business with a huge salary. You’ll need to take many factors into account to see what works best for your company, including not just all of your current expenses but future plans to expand and money to be set aside for unexpected expenditures.

Another way to decide what to pay yourself is to figure out what you would be paid for a similar position at another company. This will help you determine a range that is fair and shouldn’t hurt your company’s bottom line. Carefully research to get a feel for what other business owners with the same size of business are usually paying themselves.
And, as always, it never hurts to ask for advice from a trusted mentor.