Check your bank account. Check your bank account. That’s the buzz I hear in the online communities.
Yes. It’s a good place to start, but it’s not going to tell you the true financial fitness of your business. It just tells you three things:
✖️ How much money you have in your account at that moment
✖️ How income that came in
✖️ How much you’ve spent
What about profits? How much can you pay yourself out of that money? How to pay yourself and how much is not inside your bank account. Here’s how to find it.
The answers to your financial questions can be found inside your accounting system IF you stay current with your posting.
Check your accounting system and if you’re not in one get in one. QuickBooks or Wave are a great place to start.
The accounting system will tell you the numbers. The numbers you need to know:
- Materials / Subcontractor
- Real Revenue
- Owners Pay
- Operating Expense
These numbers are needed to calculate what percentage you should be paying yourself based on where your business stands.
If your business income is $250,000 or less here’s how your money should be allocated:
✔️ Profit – 5%
✔️ Owners Pay – 50%
✔️ Tax – 15%
✔️ Operating Expense – 30%
It’s a place to start with and shoot for.
Start paying yourself today. If this all seems scary to you start with just 1% and gradually increase from there until you’re where you want to be.