Small Business Owners: How to Pay Yourself
Team TheCodeWork
16 May 2022
3 minutes read
One of your main concerns as a small business owner is most likely how to pay yourself. A large component of feeling respected, confident, and productive is being adequately compensated
You were proud of yourself for putting in so much effort and earning so much money on your first job. You even treated yourself to something enjoyable.
Now fast forward to your professional life, and you’re the boss. Working for oneself, whether it’s writing, editing, designing, or photography, doesn’t give you the same sense of pride or satisfaction as working for someone else.
Why? Because working as an independent contractor with customers or companies can drain the vitality and passion out of your work.
If you’re paid at all, it’s usually late. Then there’s the paperwork: categorizing your money, keeping track of your costs, and sending out invoices to clients.
Where did all that money go? How can you reclaim your sense of pride in your work? Here’s how to break the pattern of being resentful of your money and start appreciating it again!
When appreciating your freelance money, you must see yourself as a crucial component of what keeps your company running (often the most important part). In other words, you’ve prioritized paying yourself as if you were an actual employee
You’d pay your staff on time if you hired them, right? Offer them health insurance and retirement payments, for example. Even if it meant depleting savings or hiring additional clients to cover payroll.
So why don’t you make your own “wage” a priority? Don’t worry; I, too, came to this revelation and had to modify my attitude toward self-employment.
As freelancing business owners, we often put our financial demands last, and then wonder why we don’t feel adequately compensated for our efforts. Taking yourself seriously, as if you were an employee at your own firm, is one method to change this.
Woohoo! Now it’s time to get rewarded in real money. The only remaining challenge is determining how often you should pay yourself.
Again, the best answer will vary depending on your business and personal circumstances, but there are certain universal options.
I’ve paid myself both monthly and weekly in the past, with the latter being the most convenient for my freelance schedule. Every Friday, I set up an automated transfer from my business checking account to my personal checking account, with the occasional one-time transfer as needed.
Obviously, almost everyone wants to be paid more frequently.
However, you must account for additional administrative tasks such as making transfers between accounts, entering these activities in your bookkeeping software, and tracking client payments more frequently.
All of the administrative work takes longer and hence costs more especially if you hire an assistant, CPA, or payroll company to handle your bookkeeping.
There are several factors to consider when determining how much to pay yourself as a freelance business owner, but the good news is that you can tailor each option to suit your needs.
You can adjust things until you find the right balance, whether you need to set away more money for taxes or want to pay yourself more frequently.
Just remember how critical it is for you to appropriately recompense yourself so that you can once again feel valued at work.
Nobody enjoys performing anything for free, and if you don’t give yourself the money you deserve, you’ll become angry and resentful of your finances.
Start establishing your unique business by partnering with TheCodeWork to hire the ideal tech staff for your Business.
