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On the surface, setting your own salary sounds too good to be true—and in many ways—it is. Paying yourself is made complicated by many factors: partners, additional employees, and whether your business is actually in the “making money” stage.
 

In the startup phase, you basically get what’s left after all your expenses (i.e., cost of operation and bills) have been covered. Once your company shows consistent profit, you are definitely entitled to take a share of those profits and set up a  consistent salary for yourself based on industry and regional standards.

Review SBA.gov’s Income Statistics page to get a feel for what other professionals in your industry are getting paid. One caveat on these figures: you may not be able to pay yourself as much as the averages listed here yet. As a small business owner, your goal is long-term growth and the amount you get paid should foster growth for your company.

The type of business you are running (be it S-corp, LLC, sole proprietorship, or whatever) can also impact the amount of salary you can collect. Be fair with yourself, but keep in mind that paying yourself too large a percentage of your profits (especially if your business is a corporation) can get you in trouble with the IRS—or at least audited.

It is never a bad idea to ask for help when you need it. Many small businesses don’t have an accountant on staff, but need a little more support than accounting software provides. Accounting and payroll services are essential for considering all variables and factors involved when determining your salary and managing your profits.

We’d love to answer your questions. For more information on accounting, taxes, payroll, bookkeeping, and human resource management for small businesses, leave us a comment or find us at http://www.qualitypayroll.net/html/services.html.

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