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Tuesday, November 24, 2020

How To Set a Salary When You Are Your Own Boss?

How To Set a Salary When You Are Your Own Boss?

The entrepreneur enjoys the privilege of being his own boss, but this advantage is also an open door to temptation when the time comes to pay himself. It is therefore necessary to take into account several aspects before paying yourself your salary.

It is very tempting when you have the possibility of wanting to afford a significant salary. But certain aspects such as the health of the company, its expenses and especially the profits, must be considered. To begin with, at the very beginning of his activity, the entrepreneur does not earn much. He can therefore choose to pay himself a minimum the first 6 months or otherwise the first year. On the other hand, there are private organizations which grant certain entrepreneurs financial aid in the first year. A relief that can leave the entrepreneur time to build a substantial cash flow.

Self Employed

But in the launch of its activity and also according to the sector of activity, the remuneration may not always be constant . It can vary depending on several factors. Some activities are much more successful in one season than in another.

To set your salary intelligently, you need to have an idea of ​​your personal expenses. You can find it by listing your monthly personal expenses. Next, consider your earning potential. This will be revealed to you by considering the range in which your profits fall every month. If your personal expenses are 1,000,000 Fcfa every month and your profits are between 1,500,000 Fcfa and 3,000,000 Fcfa, set yourself a salary of 1,200,000 Fcfa for example.

Anyway in the distribution of your finances,  always conserves a section for contingencies, off-peak periods or events that may be beyond your reach. Then, keep the same rate of remuneration that you can increase each year if your activity runs smoothly. Finally, do not forget that your concern must be to perpetuate your business and with regard to your salary, by organizing yourself properly, you will soon be entitled to pay yourself a lot more without this being risky for your activity.

This is why it is important for the entrepreneur to know that he has restrictions in the payment of his salary. In order not to harm its cash flow, its remuneration must be thought out.

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