Paying yourself a wage
Apr 08, 2021Paying yourself a wage?
Ok, paying yourself from yourself might seem strange or unnecessary, but in general it is best business practice.
As a sole trader this has no effect on your taxable income, it's just a healthy habit to be in.
It helps to keep your business expenses and personal expenses separate, and it ensures steady cash flow.
Whether you are just starting up, or you are experienced but find yourself scraping the barrel to cover costs or to buy new equipment. Cashflow is crucial.
You should have at least one account for your business and a separate account for your day to day living. (you might like to have other accounts where you allocate money for GST etc)
It's up to you to decide what your "wage" should be, how much need to cover your weekly living costs, and your spending money. Once you have that figure, set up a weekly automatic transfer from your business account to your personal account.
You will soon become accustomed to the idea that your "wage" is for you, and whatever is left in the business account is your cashflow and capital for purchases and ongoing expenses, instead of having a big mixed up free for all mess.
Pretty soon you will see your business account looking quite healthy and you will be prepared for any unexpected costs, then you may like to increase your "wage" as time goes on.
You can find more about paying your own wage, hourly rates, super and GST in our online course "How to start a successful lawn and garden business in 21 days"
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