Running a Small Business: How to Pay Yourself
As a small business owner, one of the most overlooked, but important aspects of your business is figuring out how and when to pay yourself. You’re focused on building your business, handling day-to-day tasks, and managing expenses, but don’t forget about yourself!
At some point, you have to start paying yourself to make sure your hard work pays off. Not just for your business, but for your personal life as well!
When Should You Start Thinking About Paying Yourself?
If you’re just starting your business, paying yourself might not even be on your radar yet, and that’s totally okay. You’re probably focused on covering business expenses and making sure the lights stay on (literally or figuratively). But here’s the thing: as your business starts to grow and you see a consistent cash flow, it’s time to think about compensating yourself for your time and effort.
Paying yourself isn’t just about making sure you’re financially okay, it’s about valuing the work you put into your business. Remember, you are the business, and your time and energy are just as important as any other expense.
A Few Tips to Help You Pay Yourself
- Separate Your Business and Personal Finances
This one is huge. If you’re mixing your personal and business finances, it can get messy, and you might not know how much money you can actually afford to pay yourself. Open a separate business account, and keep track of your income and expenses so you can pay yourself with confidence. - Know Your Personal Expenses
You can’t figure out how much you should pay yourself until you know how much you need. Take some time to calculate your personal expenses—everything from rent and utilities to groceries and savings. Don’t forget about the future. Things like retirement contributions and debt repayment matter, too. Knowing your personal expenses will help you figure out the minimum amount you should be paying yourself. - Set a Realistic Salary Goal
Your salary goal is going to depend on a lot of factors, like how much your business is making and how much it needs for growth and operating costs. In the beginning, your salary might be small, and that’s perfectly fine. As your business becomes more stable, you can start increasing that amount. Just be sure it’s something you can maintain without putting your business at risk! - Pay Yourself Regularly
Consistency is key. Even if it’s a small amount, paying yourself regularly (whether it’s weekly, bi-weekly, or monthly) will help keep your finances in check and make sure you’re always paying attention to the health of both your business and personal finances.
Learn How to Pay Yourself with This 15 Minute Course
Now that you know the basics of paying yourself, it’s time to dive deeper into calculating a salary that works for you. Introducing our free course: Calculating the Salary You Deserve.
We’ve partnered with Verizon to make this course on paying yourself available to you completely FREE! All you need to do to get started is visit Hope2Women.org/Verizon, create a free account, and access the course instantly.
About the Course:
As a small business owner, it can be tough to prioritize paying yourself when business expenses keep piling up. But here’s the truth—you deserve to be compensated in a way that not only covers your living expenses but helps you build for the future. In this course, we’ll walk you through the steps to figure out your ideal salary.
This course will teach you how to:
- Identify your personal expenses and set yourself up for future fulfillment
- Calculate the amount of money you need each month to cover those expenses
- Establish salary goals that align with both your personal and business needs
By signing up for this course, you’ll also gain access to a variety of other small business resources, including live events, free business templates, and more! Plus, you’ll become eligible for $10K grant opportunities that are released throughout the year.
Sign up here: Hope2Women.org/Verizon
About Hope2Women
At Hope2Women, our mission is to Help Others by Promoting Entrepreneurship. We exist to empower women entrepreneurs to succeed, grow, and thrive. We’re here to support you with a wide range of free resources, including things like:
- Business templates
- Free business coaching
- Funding opportunities (loan readiness prep and more)
- Connecting with a Women’s Business Center near you for more support
Be sure to follow us on Instagram for even more helpful tips, updates on our programs, and to connect with fellow entrepreneurs who are navigating the same journey as you!