#AskIdara Series: Do I pay myself a salary as a business owner?
Question: "I run a small business as a sole proprietor and it's becoming profitable. I was in a conversation with a friend the other day and he expressed shock when I told him I wasn't getting a salary from my business. I thought it was weird. My question is, do I pay myself a salary as a business owner?"
The short answer is - yes.
However, getting paid as a sole proprietor is not always as easy as it looks. There are also other implications to consider before making the decision.
The very first step is to separate business and personal accounts if you're not already doing so. You'll need it to keep precise records of your revenue and spending as a business owner. If you deposit all of your company revenues into the same account that you use for personal needs, it will be incredibly difficult to do so. This will also help simplify things for yourself and the IRS when filing taxes, and help you strategize effectively for the next year or next month.
Ask yourself these questions to begin:
It's completely fine if your salary is not a lot to start with. Remember that you're still building and as your company grows, your salary and compensation should also increase. The goal is not to run your business into bankruptcy so you could buy 'aso-ebi', but to motivate you enough to follow through with what it takes to be an entrepreneur in Nigeria. Don't forget to also budget for taxes. If you're confused about that, Eazipay can assist.
I hope this helps.
Love,
Idara.
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Hey there! Thanks for taking the time out to read our newsletter. Throughout the month of June, we will be running the #AskIdara Series to answer all your business-related questions and concerns. Feel free to send in your questions and Idara might just answer them next week. Till then, ciao!