Mark Zhang

How do I work out what to pay my self as a wage and how do I go about it?

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1 Answer

Jef Lippiatt

Jef Lippiatt , Owner at Startup Chucktown

One of the first questions I would ask is, are you profitable? Meaning, are you currently making more money than you are spending? If not, it isn't time to draw a wage. Keep in mind if you need to scale (add employees) they are the first to get paid and you are the last to get paid (as a founder / owner).

If your business is making a profit, do you have more than enough to keep the company profitable for 1 to 2 months and still have extra money left over? If not, keep not drawing a wage. If this sounds like a board game, you aren't far from the truth.

Lastly, if your business has met and exceeded both of those conditions it may be time to start drawing a wage. However, I would recommend starting small and gradually scaling it up to avoid having to ramp your wage back down.

If there is still too much "haze" around this topic, I'd recommend talking to an accountant or tax advisor.

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