How much should you pay yourself?

If you’re like many other small business entrepreneurs, you pay yourself as the money comes in. Good month, pay yourself more. Bad month, pay yourself less. In general, this is a mistake. It’s easy to tell yourself you’re justified in pulling extra funds out of the business:  There are extra profit bucks in the business bank account — you’ve worked hard and you deserve it — your family should have something extra — whatever. But depleting your account can be dangerous. If there’s a bad month, or maybe a costly problem, you need enough cash to fix the problem and move ahead. You have to put away enough for a rainy day, and you can’t do that if you spend whatever comes in. The solution:  Decide on a salary for yourself that’s right for you and for your business, and then stick to that salary. When it’s clear your business is doing better on a consistent basis, then you can give yourself a raise.

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