If you tuned into my blog post last week, you hopefully understand the importance of keeping your business and personal transactions separate. That being said, you still want to use some of the money that your business is bringing in. How you do that, is by paying yourself. I know what you're thinking. How? How often? How much? But don't freak yourself out, I've got you covered.
How to Pay Yourself
This can be done a couple of different ways. One way would be for you to withdraw a bundle of cash from your business bank account. From that point, it's yours to do as you please. The way most do it (including myself) is by setting up a transfer. This can be done through your online banking portal. You send the money from your business to your personal account without having to run to the ATM in your sweatpants.
How Often do You Pay Yourself
Most business entities can take owner's draws, which can be done as often as you want. You want some money once a week? Cool. Want to take a larger sum once a month? Works just fine. Now, if you are an S Corp or a C Corp, you have to take a paycheck, which happens twice a month.
How Much do You Pay Yourself
The answer to this question is, it depends. Hopefully you know what kind of income your business is bringing in. Income is what you have left after you subtract all your business expenses from your revenue. If you have $9,000 worth of income, it's up to you to use your discretion about what to pay yourself. As long as you are leaving enough money in your business for it to run, you're in the clear.
One more thing. I have had multiple people reach out to me and talk about the guilt they feel for "taking money" from their business. You are not taking money from your business. You are paying yourself, and their is no reason to feel guilt for that. Would you go work for someone else for 40+ hours a week, and then say "oh don't worry about paying me, I feel bad"? Hopefully not, and you paying yourself from your business isn't any different. You earned your money, girl.
Did you miss my webinar? Head over to the Buy from a Black Woman YouTube Page to catch me going over something things you need to know about accounting when starting your business. The replay is live now.
Willow Creek Financial Services
Buy from a Black Woman Contributing Writer
Lauren formed Willow Creek Financial Services with the purpose of helping you, the small business owner, have peace of mind and confidence about your financials. With an accounting degree and years of accounting experience behind her, she is here to help you grow your business.