Demystifying Owner's Wages: Tips for Small Business Owners
Hi there. Welcome to today's episode of Better Business Insights. I'm Liz Jarvis and in my business, I take the stress out of numbers for business owners. Today's topic is Owner's wages. There is so much confusion around what wages an Owner should take out of the business. And the reason for some of that confusion is because there are so many different ways to structure your business. You might be a Sole Trader or you might be a Partnership, or you might be a Company, or you might be a Trust, or you might be some combination of all of those things. You might be a Director of a company. So all of those different ways of relating to your business actually end up with slightly different results as to what your wages are and how they're treated. Are they treated as drawings? Are they treated as Director's fees? Are they treated as straight up and down wages with everybody else? Are they Salesman's commission? There is no one right solution. But it is important that you're taking out of your business, some money for you and your time for running that business and that you structure that so that you can pay your own costs without complicating the cashflow of the business. Now, if your business is not making enough yet for you to draw from it, that's okay. You can do it without any Owner's wages. But I would say to you - be careful about that. What is the model you're setting up for yourself in terms of not being able to pay yourself? Is it really going to be worth it in the long run? So, as I said, Owner’s wages can be a little bit murky. But it's important that you get benefit from your business. So if you'd like to discuss the Owner’s wages in your business, reach out to us through our Facebook page or email, but reach out and ask questions. Like I always say, get curious and enjoy your numbers. Because we want your business to do well. And if it's not doing well, we want to solve that as quickly as we can. Have a fantastic day. We'll Ssee you next time.
There is so much confusion about what an owner should get from a business - so I have put together some tips for you in this video. Whilst business should be separate from personal when it comes to your spending , they should not be treated as completely separate silos! Your revenue, your expenses, your trajectory, your lifestyle and your financial goals at home or at work should be linked together intelligently especially when it comes to minimizing taxes and maximizing borrowing capacity! Want to know more ? Book a quick Chat with Liz
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