🔍 Are you finding that you are not really paying yourself a decent wage as your business income seems to be used to pay your business expenses?
🔍 Is everyone else is getting paid a decent wage except you?
🔍 Are you a small business owner who regularly takes money out of their business to pay for their personal expenses and does not pay themselves a regular wage?
🔍 Or, do you take out what you want when you need it and have your accountant sort it out at the end of the year?
This is not the best way to run your business If you're a company, then you need to realise that this money is not yours.
The company is a separate entity from you and taking out money for yourself is not classified as a wage. Being a company owner/director, you can set yourself up as an employee (which I highly recommend). You will then be eligible for superannuation.
Just because you are the owner/director does not mean you don't have to pay your super and on time. The same superannuation rules may apply to you as your other employees.
If you're a sole trader, your net profit gets taxed at your individual rate and you do not have to pay into your superannuation fund. You can review this with your accountant about contributing to your superannuation fund to benefit you later in life.
So how much do you pay yourself?
Here are four things to consider:
#1 Can you pay yourself the market rate for your industry?
#2 If you do pay yourself, is it enough to cover your personal expenses?
#3 Keep in mind that cash flow can fluctuate, and you may need to adjust your wage accordingly.
#4 If you're not paying yourself a decent wage, review your financials to identify what changes can be made to get you to a better position.
Regardless of whether you're a company owner or a sole trader, it's always a good idea to pay yourself a regular wage.
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