Rewarding yourself after successfully running a business or as your business grows is essential as that tells you that your efforts are paying off. How to pay yourself as a business owner depends on many factors, such as the growth and the structure of your business. It’s one of the things you need to consider — think of it as a salary that you pay yourself every month.
For some people – especially freelancers running a business – the revenue they target each month depends on how much they earn per hour. For example: if you want to earn $30 per hour as a graphic designer, you’ll need to have a revenue of $240 per day to reach your goal or about $5520 per month. The number of clients you should contact every day or every week should align with your revenue target.
Ways to Pay Yourself
The freelancers may pay themselves a regular salary, just like an employee of their company. If the structure of your business is an S-corporation or limited liability, then this is legally required. The rest of the revenue may be saved for some other businesses expenses that may come up in the future or for your savings.
Drawing in money or Owner’s draw lets you reward yourself from your business’s profits or as you need the money to pay for expenses or leisure.
Make sure that you set aside money regularly for the taxes that you have to pay.
Mistakes to Avoid
When running a business, ensure that you have two accounts – one for personal and one for business. Avoid using business money to pay for your personal expenses, which may cause accounting problems down the road. You need to also hire an accountant to help you manage your money. An accounting software can also help.
Also – ensure that you consistently pay yourself. Your salary or compensation should be in your business plan as you’re the one working to keep the business running. From time to time, consider giving yourself some incentives, especially when you make a big sale or close an expensive client. That can help you motivate yourself more. Also, consider getting professional help to help you grow your business and generate more revenue and profits.
Contact Schools for Startups
When it comes to managing a business, you need all the help that you can get. It’s always best to get advice from the experts and the right tools to help you succeed. Schools for Startups can help you hone your management skills and relearn entrepreneurship. We can even help you with business plans and franchising if you’re thinking about expanding. We’ve been featured at CNN and other major publications because our system works. Get in touch with us today!