(DailyThrive.com) – Many people have the dream of owning their own business and being their own boss. Are you self-employed? It allows you to be your own leader and remain in control of your financial lifestyle. People who are new to owning their own business may have trouble calculating how much of a paycheck they should get. Here’s why you shouldn’t forget to pay yourself.
It All Starts With a Business Plan
Do you have a business plan that outlines how much money you’ve invested and how much of a return you need? If not, you should. While making sure your business goals are outlined properly, one factor to always consider is how much money you need to make.
In the above video, Bridget Casey suggests that as an entrepreneur, you should at least pay yourself at least 50% of what your business earns. If not, you could be edging toward disaster with a lack of motivation for growth. Consider adding this step to your business plan and embark on it accordingly.
Hire a Good Accountant and Financial Advisor
With any business, keeping track of finances is vital to growth and expansion. Having good financial players on your speed dial such as an accountant and financial advisor can ensure that your money and funds are headed in the right direction.
In addition, try to set aside at least 30% of the overall cash flow aside to pay income taxes. Seek advice from your financial advisor about an exact dollar amount. This will relieve the complexity and stress when tax time rolls around.
Know How to Stay Organized
While getting a big, fat check each week from your business is nice, you need to be sure you’re paying everyone properly and promptly. This means staying organized with credits and debits.
Get a bookkeeping software program like Freshbooks or Wagepoint to help sort important financial transactions and upcoming bills. This move allows you to easily track spending and makes it easy to pay your employees as well as yourself.
Watch Your Spending
Being self-employed means you’re accountable for all the money you spend. If you’re not disciplined, you can easily blow through funds that need to be rolled back into the business. While paying yourself 50% of your business revenue may be nice, also consider chipping away at outstanding debts and putting some money back into your business savings account. If you can’t do that before you pay yourself the 50%, you may want to rethink what your paycheck amount should be.
Being a successful entrepreneur is not an easy feat. And while putting most of what you earn back into your business is often a wise idea, sometimes it’s good to splurge. If you can do it while meeting all of your other financial goals and deadlines, consider yourself a success. You’ve come a long way, and you deserve it.
~Here’s to Your Success!
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