Paying Yourself More Later as a Business Owner

Advantages

Flexible for the business. The business pays you more eventually, but not based on any timetable or loan.
Flexible for you. You leave it open how, when, and how much your compensation grows.
Shows smart management and long-term commitment. This helps the company survive initially and shows your commitment to its long-term success.

Disadvantages

Might look unprofessional or too casual. By not documenting a loan or making things official or having a timetable, this might seem too casual an arrangement.
Could create questions or raise red flags. If the arrangement seems too loose, unprofessional, or suspicious, it could invite scrutiny from investors or the IRS.

Deciding Factor

How flexible can you be personally about finance and compensation?
How supportive is your spouse or partner – if you have one – in case they need to make any sacrifices?
How financially solid is your company?

Game Plan

To know how much salary you need, do a thorough and detailed monthly personal budget.
To know how much your company can afford to pay, do a realistic projection of your business’s income and expenses.
See if these calculations mesh and where you can make any sacrifices that aren’t too stringent.
Get help from your accountant if you need to, and learn about any tax issues surrounding compensation and salary payment terms.
Learn more about this and related issues at www.entrepreneur.com.
If married or living with a partner, discuss the implications and possible sacrifices your partner or spouse might have to make.

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Pay Yourself What You Can

Pay Yourself Based on Industry Standards