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I was wondering whats the best way to pay yourself if you bought a busines. salary, hourly, or just whatever is left over after all is paid at the end of the day?
working owners...
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Joined
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252 Posts
When you say working owner, is there a legit spot that you're actually filling or are you just there? I've seen a few owners that just show up a lot and call themselves a working owner, in that case I don't think its appropriate to draw a salary. Assuming you're actually the chef/GM it would make sense to pay yourself what you would be paying a chef/GM and then the profit left after reinvesting into the business is yours as well. At least thats been my understanding of it.
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5,290 Posts
@whiskytango
I personally feel that when you go into business you must pay yourself. In business you can always find an excuse not to pay yourself to take care of something else. Your burn-out will come much faster that way. In this field, almost everyone throws around the word passionate for not having sufficient income. Just me, but I think sometimes it takes money to relieve daily stress, work and be passionate and happy.
You're tax structure will usually dictate the method in which you pay yourself. You should have an accountant on board to answer your question.
I can give you info on what I do if you PM me.
Everyone and his or her brother will tell you, "I wouldn't worry about your Social Security, it won't be around when you need it anyway"
Your personal SS is very important to pay, it will be around.
HTH's
I personally feel that when you go into business you must pay yourself. In business you can always find an excuse not to pay yourself to take care of something else. Your burn-out will come much faster that way. In this field, almost everyone throws around the word passionate for not having sufficient income. Just me, but I think sometimes it takes money to relieve daily stress, work and be passionate and happy.
You're tax structure will usually dictate the method in which you pay yourself. You should have an accountant on board to answer your question.
I can give you info on what I do if you PM me.
Everyone and his or her brother will tell you, "I wouldn't worry about your Social Security, it won't be around when you need it anyway"
Your personal SS is very important to pay, it will be around.
HTH's
Joined
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35 Posts
working as in doing prep, making orders, and supporting servers with making drinks and till.
thanks for your responses
thanks for your responses
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1,137 Posts
As a working owner I pay myself a monthly salary from both my places. I dont need to physicaly work in either one, I do but thats not the point. My monthly salary comes from running my business. Yes I am a chef but as an owner my responsabilities are much more involved than production. Fact is if I could make the kind of money I do washing dishes my life would be very calm and easy.
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5,290 Posts
I'm not so sure you're understanding at all. The owner should not draw a salary if he is not physically working? I'm not so sure I want to get into it with someone who has not worn the shoes. The risk is very high buying a food business. A lot of owners put everything on the line and can lose their investment,their families financial security, their parents funds,retirement, college tuition, etc.. The responsibilities of an owner are huge. The job of being profitable to make sure that all the employees get a timely paycheck so they can support their families, the bills paid,everyday worries, etc. is worth more then a salary. If the joint goes bust, you go find another job. The owner usually goes bankrupt./img/vbsmilies/smilies/biggrin.gif
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252 Posts
I wasn't trying to be condescending by any means. I didn't mean to say that the owner shouldn't get money, it seems like it makes more sense to just take the profit (I realize that profit margins are slim in the restaurant world) all together instead. If I'm missing something here please tell me. I'm always looking to learn.
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5,290 Posts
King,
I didn't think you were condescending. I personally think you are missing something. But that's just me.
Most times, buying a business is an investment. It's not a hobby. I just think an investment should generate income. I have had Disney stock for 40 yrs.+. It generates
income for me, but that doesn't mean I don the Mickey costume and run around the park.
I have a food business for that!/img/vbsmilies/smilies/lol.gif
I didn't think you were condescending. I personally think you are missing something. But that's just me.
Most times, buying a business is an investment. It's not a hobby. I just think an investment should generate income. I have had Disney stock for 40 yrs.+. It generates
income for me, but that doesn't mean I don the Mickey costume and run around the park.
I have a food business for that!/img/vbsmilies/smilies/lol.gif
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470 Posts
The business profits are yours. You can draw a salary also but really it depends how you set up your business. Sole prop, joint partnership, or corp.
Joint is best legally( refer to a lawyer please!) because it limits your liability. If your thinking about incorporating you wouldnt be here lol.
I have a small catering business. I don't " pay" myself. I pay my employees and hopefully have money in the bank at the end of the day.
Joint is best legally( refer to a lawyer please!) because it limits your liability. If your thinking about incorporating you wouldnt be here lol.
I have a small catering business. I don't " pay" myself. I pay my employees and hopefully have money in the bank at the end of the day.
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252 Posts
Right, as part owner of the Disney corporation you're entitled to part of the profit the company makes. Just like if you own a restaurant you're entitled to the profit that come from it. I never said people shouldn't make money form owning a business.
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84 Posts
No more than 50% of the profit for an owners salary is pretty standard.
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84 Posts
You're right, I was speaking on how to gauge the actual salary figure.
Ex: restaurant does 1.2 million in revenue, 100,000 in profit. Salary should be 40-60K.
If I'm wrong someone correct me.
Ex: restaurant does 1.2 million in revenue, 100,000 in profit. Salary should be 40-60K.
If I'm wrong someone correct me.
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3,338 Posts
In most cases there is no profit at the beginning. When there is it usually goes back into the business. If possible try and draw a weekly salary, as you are an employee of the corporation, put your wife on salary also if she helps .I tried never to draw a profit as its taxed to death. Better to take it out in salary
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5,290 Posts
Well I think part owner is different then owner. I mean, I can almost see where you're coming from if the owner draws a salary and the business is undermanaged or understaffed or hurting in any way. I used to feel the same way as you until I got a taste of ownership.
Ed is spot on.
I tried to avoid going there, but for some people , if in a corporate structure, it's best to pay payroll taxes. Corporate tax is the third largest form of revenue for the federal govt. behind individual tax and payroll tax. If I were to own a corporation, I would certainly draw a salary. The time spent not physically working , but dealing with the behind the sceen corp. minutiae, is worth a draw. Just sayin.
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310 Posts
Sorry, but it's the exact opposite of what you and Ed are saying. Pulling a salary, at least from a tax standpoint, is the worst type of income for an owner. It's always better to pass throufgh the profits if you are an S corp or even an LLC. And salary is going to be taxed 7.5 % for FICA plus the additional 7.5% FICA match, BEFORE the relevant income tax level. It will never be better than passing through the profits to the shareholder (you) and taxing at the prevailing rate. How in the world can it ever be better to pay the payroll taxes? Makes no sense whatsoever. Sorry.
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