Setting your own income.
WHY IT IS DIFFICULT
There is no employer setting it, and the temptation is to take too little or too much.
WHAT TAKING TOO LITTLE PRODUCES
Personal financial strain Resentment toward the business An inaccurate picture of profitability
WHY THAT LAST POINT MATTERS
A business that only works because you underpay yourself is not profitable.
WHAT TAKING TOO MUCH PRODUCES
Cash shortages Inability to invest Tax liabilities you cannot meet
WHAT TO ESTABLISH FIRST
What you actually need to live.
HOW
Add up your committed personal costs.
WHAT TO ESTABLISH SECOND
What the business can sustain.
HOW
From profit, not from cash in the account.
WHY THAT DISTINCTION
Cash includes money owed to suppliers and to tax.
WHAT TO SET
A regular amount, paid on a schedule.
WHAT TO REVIEW
It, periodically, as the business changes.
WHAT TO DO WITH SURPLUS
Decide deliberately: reinvest, reserve, or distribute.
WHY DELIBERATELY
Surplus absorbed by drift disappears.
WHAT FORMS PAYMENT CAN TAKE
Salary, properly taxed Dividends, where a company exists and profits allow Repayment of a documented loan
WHAT TO TAKE ADVICE ON
The most appropriate mix, which affects tax.
WHAT TO NEVER DO
Take money without recording what it was.
