Starting Your Own Business- Paying Yourself

PAYING YOURSELF Determining your salary is one of the most important decision you'll make as a business owner. Here's how to do it... Two theories: Pay yourself what you are worth Pay yourself enough to get by Pay yourself enough to get by: You have to do some planning and simple mathematics. You need to put together your own personal financial statement that lists all your living expenses and any credit cards with outstanding balances as well as short-term and long-term loans. Once you have listed amounts for each of the items on your monthly budget, add them all together. This is the amount you will need to pay yourself in order to meet your basic requirements. Pay yourself what you are worth: The other system from which you can project your salary is basic worth. How much do you feel you are worth? To determine your basic worth, start by writing down your current salary or hourly wage. This is what you want to make at a minimum going into the business, but it isn't basic worth, basic worth is your market worth plus a percentage increase based on three to four times the rate of inflation. Whatever you pay yourself-save. Get an early start on retirement saving and investing. It pays to start investing early in the retirement savings, whether it's a 401(k) plan, 403(b) or Section 457 plan.