If you have a micro-business ... do you have to pay yourself a salary? Of course. It is important to do this to calculate the costs well, you may skip it at a very early stage, but it is not advisable to do it for a long time.
What would this salary depend on or based on what could you define it?
We must be aware that when starting a company or a business, we generally have to wait a few months (depending on the line of business) in which we begin to perceive profits, while that happens, everything is investment, blood, sweat, tears, fun and learning.
When doing the cost planning of the company, we must include our salary, which should be an average of the salary of employees with a similar position in other companies. Although we have not actually paid ourselves yet, we must make an accurate calculation of costs, breakeven point and estimated time of return on investment.
If we must assign ourselves a salary but always with an eye toward matching it with the earnings that are being received. It is likely that in the beginning of the company this is complicated or that it is not in accordance with the efforts or amount of work, however with the passing of the months and the increase in profits this must be adjusted.
Another way to determine a salary in the beginning of the company is to make a real calculation of all your personal expenses for the month and that record could be the first approach to a starting salary.
If I need money for my company, can I take from my personal money?
Yes, but you have to analyze before. One thing is calculated risk and another is stupid risk. If this risk calculation has already been carried out, you can take the money from your personal account to invest it with a view to returning it within a reasonable period of time.
And remember that when the 100% of your assets is tied to your company you are completely exposed to an eventuality, so try not to do it.
If I need money for my personal expenses, should I take it from my company profits?
Preferably not, if we already assign ourselves a salary this would not have to happen, but there may be situations where it has to be done due to an emergency or unforeseen event, however, we must try to make it happen continuously because it can affect the finances of the company . Remember that healthy personal finances are the basis for those of the company, otherwise the imbalance can lead to both personal and business bankruptcy.
What steps or what actions should a person take to avoid mixing the expenses of these two areas?
Taking a course in personal finance will carry over the good financial habits of an entrepreneur or businessperson for the company.
6 tips not to mix personal and company finances
- Have two savings accounts. One personal and one for the company. And if you need to move money from one to another, it is by bank transfer, since these are not considered income so they do not have to be justified or declared before the Treasury.
- Make a personal budget and one for the company, and stick with them.
- Build an emergency fund equal to six months of your monthly expenses so that you do not have to use the money of the company while it generates profits.
- Within your risk calculation to determine how much money from your personal account you put into the company, take into account the stage you are in, it is not the same to assume a large risk for a young single person than for someone of middle age with responsibilities and expenses that cannot be avoided such as child support.
- You should increase the level of savings, since one never knows the ups and downs and setbacks that are suffered as an entrepreneur and if we can continue to pay our salary. Here there is no boss to whom we can claim more than ourselves.
- Avoid by all means going into debt until you see that your company is generating constant income that allows you to pay.
Source: https://www.entrepreneur.com
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