Do you pay yourself?

Or do you only take money from the business when there's something left?

Many founders pay suppliers, employees, rent and other expenses first.

But when it comes to their own compensation, they take irregular withdrawals whenever cash allows.

This creates a financial blind spot.

If you never account for the cost of your own work, your business may appear more profitable than it really is.

Think about it.

If you had to hire someone to do everything you currently do, how much would it cost?

That is a cost worth considering when evaluating whether your business model is sustainable.

From a bookkeeping and financial management perspective:

1. Separate personal withdrawals from business expenses.
2. Establish a realistic and consistent founder compensation structure.
3. Include the cost of your role when reviewing the business's profitability.

For incorporated businesses, also distinguish between salary, dividends and other payments. They have different tax and accounting treatments.

Remember:

Your business should not only be able to pay everyone who works for it. It should eventually be able to pay you too.

So, do you pay yourself a salary, take occasional drawings, or leave everything in the business?