I get these questions all the time as a CFO: Should I pay myself? How much should I pay myself? What if I’m not sure if I make enough money in my business to pay myself? These are all valid questions, but first and foremost - YES! You should absolutely pay yourself!
In this episode, I’m sharing how to figure out how much to pay yourself, what to do if you don’t make enough to pay yourself a comfortable salary, and what to do with extra cash you have in your account so you can feel comfortable paying yourself a distribution.
Join my FREE 5-Day Profit Boost Challenge! Starting March 14th, you’ll get daily training videos from me to help you find more money in your business, optimize cash flow, and get confident in your finances! Sign up at https://www.profitandprosper.co/challenge!
Do you have a question or topic you’d like me to cover on the show? Click here to send us your submission!
Listen to Episode 4: 6 Money Habits to Implement for More Cash Flow and Wealth
Some key takeaways on paying yourself more consistently:
At a minimum, you should pay yourself a consistent monthly salary. If your business can’t consistently pay you a market value salary for the services you offer, it’s not a sustainable business. I cover how to make your business more sustainable in this episode!
Then, as the owner of your business, you can take profit distributions (kind of like a bonus!) from the profits of your business. If your cash flow can’t support paying you consistently, you need to work towards positive cash flow by either increasing your sales or decreasing your expenses. Increasing sales might mean going out and getting more customers, or simply raising your prices so you make more money for the same amount of work and sales activities you’re currently doing.
If you have cash in your business bank account, but you’re not sure if you can pay it out to yourself, evaluate your numbers and categorize all the remaining dollars in your bank account into these buckets: necessary ongoing expenses for one month, debt repayments, money for taxes, a cash cushion to cover expenses in case of low cash months. Whatever’s leftover is yours to spend however you’d like!
I’m Sarah Young - a CPA, Virtual CFO, and the Owner of Young + Co! I have over a decade of experience in helping entrepreneurs scale their businesses and build wealth at the 6- and 7-figure levels, and I started the Profit + Prosper podcast to help you do the same. Profit + Prosper is a business finance podcast created to help entrepreneurs build their wealth in a way that’s fun and empowering. This is NOT a boring numbers podcast - I will share tactical tips to increase your profit so you can truly prosper in your business and in life. I hope you’ll subscribe so we can Profit + Prosper together!