Guide
Drugs and alcohol policy
In this guide, we'll look at the risks associated with drug and alcohol misuse in the workplace, how to limit them and how to support staff struggling with substance misuse.
- HR Policies Documentation
Peninsula Group, HR and Health & Safety Experts
(Last updated )
Peninsula Group, HR and Health & Safety Experts
(Last updated )
As a small business owner, how do you pay yourself? It may seem like a strange question, but many SME owners simply don't know. Read our guide for the full lowdown.
As a small business owner, you’ll need (and, no doubt, want) to pay yourself a wage. But in the hectic rush of managing other aspects of your business, you may not know how to do this. So what are the allowable expenses to provide yourself? In this guide, we’ll point you towards the best option available.
To take the first step, you’ll need to determine what your business is. This defines your payroll procedure, from your staff members through to yourself. For example, your business may be a sole trader, in a partnership, or a limited company. These all affect how you could pay yourself.
It’s important to remain realistic with your wage - especially if you run a small business and money is tight. If you overpay yourself, you could end up jeopardising your business. Conversely, if you underpay yourself, you may accidentally place yourself in financial hardship. When considering your wage, you must work out what your business can afford. Manage your expectations as, further down the venture, you’ll have the opportunity to advance your wage as you see fit. Remember, you should pay yourself out of your profits (as opposed to your revenue). Once you begin earning money, you have to consider tax, payroll for your staff, overheads, and various other fixed costs. You’ll need to separate personal and business expenses. You can do this easily through two different bank accounts. So, you’ll need to open up a business bank account. Through this, you can determine the profitability of your business. After this, maintaining detailed records of expenditure can help you to determine your wage. But consistency is the key. If you’re paying yourself £2,000 p/m for example (circa £25,000 p/a) then you’ll have to work on bringing in revenue to your business. But throughout this you must remember revenue isn’t outright profit—all your expenses should receive consideration before deciding on your worth to your business and then choosing your wage.
A small business owner salary can take time to reach its full potential, so you shouldn’t worry if it’s lower than expected to begin with. But there are some techniques you can use to improve your pay. With your salary decided, you can enhance your wage through tax efficiency tactics. Tax laws are, of course, complicated and there are various other ways to maximise how much you earn. The following pointers are an effective starting point.
Still wondering what the best way to pay yourself as a small business owner is? Call us today on 0800 028 2420.
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