Pay Yourself a Salary
Paying yourself a salary and treating yourself like an employee — even if it’s just on paper — is crucial to building a true enterprise. If you don’t separate your compensation as employee from your equity as owner, you will not have a true gauge on profits of the business.
What are the takeaways?
- You are both a rainmaker and an owner; recognize BOTH on your P&L statement.
- Separate sales expenses from operating expenses. Sales expenses – your comp and other advisors’ comp should equate to 40% of gross revenue.
- Use your REAL net profit number to make strategic decisions about next year.