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How Much Should You Pay Yourself
It seems like a silly question, but it’s one that owners of business startups have to answer. How much of a salary should they receive?Depending on how the business is structured, the answer can be, “What the market will bear,” “Just part of what I’d make otherwise” or even “Nothing at all — at least for now.
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Bill Chapman on July 29th, 2005 8:05 am
Not only how the business is structured, but also on tax consequences. Salary is taxed in multiple ways: fed tax, state tax, social security, medicare, for you as an individual, plus workmens’ compensation, unemployment insurance, etc., for you as a business.
Minimizing salary minimizes taxes. Let the business buy things you use in the business instead of paying you, and then your buying those same things, and you bypass taxes in two ways: the salary taxes, and the profit taxes (profit is lowered by the expenses). The company (if you are set up as a corporation) does not have to pay social security or medicare on its income, but you do, if you take it as salary.
yolanda cruz on August 3rd, 2005 1:17 am
I was 6 years short of my compulsory retirement when I was retrenched after 31 yrs of service. I dont what to do now? I can use computer. What job/business can you recommend?
Please advice. Thank you
banquet manager on August 31st, 2008 6:04 am
When I had my own business, I paid myself whatever I could afford that week. sometimes it was a decent payweek, but many times it was barely nothing at all. That’s the ups and downs of being self employed. Now I work for a hotel.
Visit: So You Want To Be a Banquet Manager
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