Grow My Business
Five Reasons Why You Should Get Paid as a Business Owner

When you're building a business, paying yourself might not be the first thing that comes to mind. However, if you focus on the right areas and payment methods, you can set yourself up for success as your business grows. It’s essential to avoid viewing your business as an endless source of funds for your lifestyle. Instead, reinvesting into your business is crucial for systematic growth. You need to ensure you have enough money to cover all your business costs, including your own salary. Here are five reasons why you, as a business owner, need to get paid.

1. You Don't Own the Money from Your Business
   This is probably the most important thing a new business owner needs to understand. You don’t actually own the money you put into your business. Most of it must be used to cover operating costs, including supplies, salaries, rent, taxes, and payments to suppliers. Even if you make a profit, you need to reinvest some of it back into the business to facilitate growth and prepare for future needs. While you can keep some of the money, remember that much of it belongs to the business.
2. It Costs Money to Grow
   When you started your business, you likely had ambitious plans to become a market leader. However, achieving that goal requires investment. If you spend all your revenue after covering bills, you won't be able to build the business into the empire you envision. Save money for future projects and strategies to ensure ongoing growth.
3. Irregular Payments Create Issues
   By paying yourself a salary, you establish a steady income for your personal needs. This allows you to budget effectively and plan for your goals. If you rely on irregular payments, you’ll worry each month about covering your bills. A regular salary motivates you to help your business achieve its goals. Additionally, irregular and large payments may raise questions from tax authorities.
4. Taxes Must Be Paid
   Regardless of whether you take a salary or dividends, you will have to pay taxes on the money you withdraw from the business. Tax obligations can vary based on your business structure, but remember that dividends are not tax-free. You will need to pay taxes on both the company’s profits and the dividends received.
5. You Don’t Get Paid for Your Work
   By neglecting to include your salary in the business budget, you essentially indicate that you're working for free. While this may be true initially if you used your own money to start the business, it’s vital to ensure you’re compensated for your time and skills as the business grows. You wouldn’t work for free for an employer, so why do it for your own business?

How Much Should You Be Paid?
With these points in mind, it’s clear that drawing a salary from your business can alleviate future complications. You can either pay yourself a salary typical for your position or take a share of the profits. Set a limit on the percentage of profits to avoid negatively impacting cash flow. Initially, consider your personal expenses to ensure your salary covers them.

The Bottom Line
No one should be expected to work for free, especially the person driving the business. By securing a sustainable salary to cover your living expenses and savings, you align your goals with the business, setting both you and your business up for long-term success.