How much do you pay yourself??

[Nick Chapman]

Not looking for an actual $$ figure. So please don't get offended.

When you finish a job at the end of the day, week or month. How do you figure what goes in your pocket, and what stays in the business account?

Do you use a % figure? Like 50% goes to the business and 50% goes in your pocket?

[RogueGypsy]

Re: How much do you pay yourself??

I'm not a pro detailer, but I am self-employed.

So to answer your question. Whatever my accountant tells me too.

That sneaky little number cruncher is worth every dime he charges. I pay all my bills as they arrive, then we meet quarterly and go over the books for the previous quarter. At which point he advises me on how to 'distribute funds in order to retain the greatest amount for myself'. The majority stays in the business account until otherwise advised.

Remember;
Tax evasion is illegal.
Tax avoidance is intelligent.


Brock



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[Nick Chapman]

Re: How much do you pay yourself??

So, if you're only seeing your accountant 4 times a year, does that mean you're only getting paid 4 times a year?

[BlueZero]

Re: How much do you pay yourself??

Back when I was self employed my accountant had me put what I would need for taxes in the business account and the rest went to me. I'm not a very good 'business' person so I don't know if there's a better way to do it or not. In hindsight he didn't seem like a very good accountant either.

[RogueGypsy]

Re: How much do you pay yourself??

So, if you're only seeing your accountant 4 times a year, does that mean you're only getting paid 4 times a year?

Sort of.

I have a monthly salary (it could be weekly, daily or whatever works for you) that covers all of my personal expenses (bills, food, fuel.....etc.). Quarterly I get a bonus or profit sharing (I'm incorporated) depending on the tax benefits.

My monthly personal expenses are very low, I use almost everything in the business, so the company owns and pays for almost everything (huge tax advantage). So what little I take is to pay bills, pocket cash and for investments.

One of the first things we did, after he reviewed the previous 4 years, was to outline a salary based on my expenses. That way I always have what I need, but still have the flexibility to take advantage of tax breaks from a business stand point. Once you've paid yourself, you can't give it back to the business (well, in a round-a-bout way you can). Which can really limit the options to your business.

Now, because I'm incorporated, technically I am the business. So I can use any funds at anytime for whatever I deem necessary (so if an emergency comes up, I have access to what I need) , but it's more difficult to keep track of and account for this way. The boys in Infernal Revenue like to see clear lines drawn in the sand.

I used a Dome tax ledger in my business for years. Thinking accountants were overpaid, under skilled mathematicians who couldn't find a real job. Then I got too busy to do it myself and decided let someone else do it. That year I got to keep about 25% more of what I made, than I had before. I was sold. He paid for himself and bought me a couple of new tools!


A friend of mine does roughly the same thing, but only takes his books to the accountant at the end of the year. During the year he just draws and uses what money he needs for himself. Then at the end of the year his accountant calls that his salary. His business has very low overhead and not many ways to get tax breaks, so for the most part (less minimal expenses) he pays himself what the business makes. And just pays personal takes on that.

I'm not real up-to-date on tax code (thus the 25% when I went to the accountant), but what it seems to boil down to is this:
Businesses have many, many, many more tax advantages than an individual. So the more money you can keep in the business, the more money you get to keep at the end of the year.

As a mobile detailer you should have huge write-offs like I do. Everything used in your business. Phone, van, clothes, products, equipment, fuel, garage (if you park the van inside, part of your property if you park it outside), part of your home if you have a home office, computer.............. the list goes on. If you touch it doing business, it can probably be written off.


Brock

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[BlueZero]

Re: How much do you pay yourself??

Sounds like I should have had your accountant and I could still be working for myself!

Great information, thanks for posting it.

[J. A. Michaels]

Re: How much do you pay yourself??

I think that is very valuable information. For seasoned detailers or new businesses just starting out. Thanks for sharing it.

[Forever New]

Re: How much do you pay yourself??

Accountants are wonderful (reputable ones atleast)

[H.E.D]

Re: How much do you pay yourself??

i say get paid $25/hourly and %25 and %75 either for yourself or for the business.

[RogueGypsy]

Re: How much do you pay yourself??

You are all welcome, glad to share the info. We work hard for our money and I, for one, think we should be able to keep all that we can.

If you are a small business, I would strongly suggest 'incorporating' yourself. Not only are there great tax advantages. It greatly reduces you 'personal' liability in the business. ie: If you are just a business and make a big booboo, like buff through the clear on a half million dollar car. The owner of the vehicle can not only take your business, but he can take all of your PERSONAL assets as well. A corporation stops the liability at the business, protecting your personal assets. I know that no one here would ever do anything like that, but stuff happens. Sometimes stuff other people have done happens to you too. Protect yourself.

Oh and my accountant also calls himself a 'Tax Advisor', I don't know if that is just a way to draw more business or if it is an actual specialty. But I do know, he is VERY good at what he does.


Brock


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[drculinarian]

Re: How much do you pay yourself??

Brock:
Do you have an "S" corp. or do you have a "C" corp?
I would also recommend that anyone in business be incorporated. It separates's your business from your personal assets.
Those who file schedule C for self employed are asking for trouble. IRS audits these
filings more than any other.
Dr. Maurice

[Details]

Re: How much do you pay yourself??

I recently purchased a mobile credit card machine. $55 per month, i tell my customers that there a $3 transaction fee. they dont like to pay that so it has drove up my cash income. so what ever goes through the credit machine goes in the bank in my business account. the rest goes in a safe in my house. that minimises my taxes. also i try to decide what is more worth it, paying for big business expenses in cash to avoid 20% taxation on earned income, or writing it off at the end of the year. usually i keep cash for myself and credit payments in the bank for proof of income.. it comes out to roughly 25% goes to the business and 75% in my pocket.

[jmakado]

Re: How much do you pay yourself??

I am not a pro detailer but am a sole proprietor (contractor). Which is what I assume you are...sole proprietor that is, not contractor

Anyway, I made a budget including my living expenses, recreation money, etc. I then divided that by how many hours I work and came up with an hourly wage to pay myself. All the rest goes into my business account.