How do you set your own wage?

[Rosalind]

Right now I'm going through the masses of paperwork and whatnot involved in setting up my own small soapworks business, and one thing just occurred to me today. I've always wanted to own and run my own business, but never considered what my own wages would be!

How do you soapers here do it?
Do you calculate yourself an hourly wage?

I'm thinking of taking a percentage of sales as my salary. What is a reasonable percentage? What kind of percentage do yourselves take? I have a regular dayjob so I'm not supporting myself with it (not yet, haha) but I would like an idea and general opinions.

Thanks!

 

[Rob K]

Having run several businesses, I can tell you that as the owner your wages are whatever is left over after all your other expenses are paid...

 

[Tabitha]

I think it is very important to pay (reward) yourself for your hard work. At the end of each week I deduct 50% of whatever is in paypal & I do something with it that I can notice like pay my electric bill, buy my kids back to school clothes or take the family on a weekend road trip. The other 50% goes back into supplies. It is so easy to squander those funds & not feel like you earned anything. It is even easier to turn back around and spend 100% of the cash on impulse supplies, like sampling 46 new fo's that you do not need.

 

[sudsysarah]

Great Advice Tibitha. Thank you for sharing with us all.

 

[Rosalind]

Thanks for responding, this thread was dead for a couple weeks.

But yeah, you answered what I wanted to know, which was basically what part I should keep for myself, and what part should go back into it.

 

[carebear]

Thanks for responding, this thread was dead for a couple weeks.

But yeah, you answered what I wanted to know, which was basically what part I should keep for myself, and what part should go back into it.

As a startup, you may not be able to do that for a while.

 

[lioness]

I think for any small business most owners want their business to keep running for many years and in the first year don't take much from it and any profit that comes goes back into it to keep growing....they say the first year is always the hardest but I also know someone that didn't take any profit for three years.
I think it all depends on what you have put in to in to start with and what you really need to take out of it. Like if you need to take some of the profit to live or if you need to take some to feel like you are rewarding yourself ....
In the end though the bills for the business need to get paid to stay afloat and you need money to keep buying supplies and insurance so the rest is up to individual preference and where you want your business to grow and where you see it doing in a few years...

 

[Lindy]

When I'm calculating the cost of products I add in a wage that I would be paying someone else to do it so I have that included in basic cost. I'm now in my 3rd year of business and this is my first year in a B&M so I am not getting a wage yet although I do give myself a little bit of money to spend. I expect it will be at least another year before I can even pay myself minimum wage over and above expenses.

 

[judymoody]

I imagine that you want to set some sort of plausible wage for tax purposes, no?

 

[Lindy]

Judy I don't, at least didn't this past year. Now that I've incorporated the business I was will have to declare some kind of income next year....

If you're a sole proprietorship then all earnings of the business are your personal earnings and all expenses are claimable against that income.