You run everything: You fix the messes, you talk to every client, you handle the bills — and still can go home wondering if you’re going to get paid this month.
This is how most small business owners live. Doesn’t matter what you make — if you don’t have a way to pay yourself, it all can feel like a never-ending chore.
So, let’s get you a system. Not a big one, just one with enough structure so you stop skipping your needs.
Start with a schedule
Stop waiting for the leftovers at the end of the month. If your pay depends on totally smooth operations and sales each month, it puts you and your personal goals at risk.
So start simple: Pick a number. Make it a regular amount, and one that won’t give you an even bigger headache when you’re working through your finances later.
To that end, it helps if you get paid just like any other employees you may have. When paying taxes on your income, it’s a good idea to figure out the most financially efficient way to pay yourself. The IRS has excellent resources that cover topics like defining employees, small business expense resources and how to report payments to independent contractors.
Use Dedicated Accounts
Does all your money drop into one account, and disappears before you can figure out what’s yours? You’re not alone. But the best way to pay yourself is to get your books in order. A simple approach is to break it into three:
- A bills and business expense account
- Your personal pay
- One for small profit — even if it’s just 1% off the top of every payment
Move the money the day it hits, or make those transfers automatic. You’ll be grateful you set yourself up for success later!
Pull your tax money the second you get paid
Not the week after. Not once a month. Every time you pay yourself — and if you’re not already deducting taxes already — take 20% of that total and stash it away for Uncle Sam. Leaving your quarterly taxes up to chance can become an expensive issue later.
Check your pricing before it burns you
Your software probably costs more now than it did two years ago, and you’ve certainly had to replace equipment in that time, too. But your rates haven’t changed in two years — so if you’re wondering where profits have gone, revisiting your operating costs is a good place to start. To remedy, review your operating expenses every three months, and build in gradual price increases to keep your margins consistent (and your pay certain).
Line up your bills with your pay schedule
Let’s say that you’ll start paying yourself on the 10th, but your rent’s due on the 3rd. Now you’re transferring money back and forth, paying late or feeling stressed before the month even starts.
But there’s a simple hack to fixing this problem: Move your bills. Many utility companies and financial institutions offer pick-your-own pay dates, making it easy to align your paydays with the days your bills are due.
Give yourself extra flexibility
If you have burdensome credit card bills or expensive personal loan payments to juggle while growing your business, Accredited Debt Relief may be able to offer you some breathing room. Our debt consolidation program can save you 40% or more on eligible monthly payments, and even help you get debt-free in as little as 24-48 months.