Is it ideal to give myself a salary cap when I own my own business?
I am in the planning stages if a business and I am making policies regarding salary and promotions. It is my idea to make salary minimum wage or 1% of profit whichever is higher. I was planning to have a salary cap for myself so after I earn a certain amount any remaining would be used to expand the business or for bonuses for employees.
Obviously if my business making billions of dollars I really do not need a billion a year especially if I have a comfortable house all paid for as well as cars, yachts and private jets. I figure if I give myself a salary cap and reinvest the rest into my business I can help people out of poverty by providing them decent salaries in which reward their productivity.
- ntLv 62 years agoFavorite Answer
Yeah, a half million a year ought to do it. lol
When I started my business, I did not take a dime out for about a year because I reinvested my profits and the business needed the capital. Even later on, I never took a salary, I just paid my bills. Since I was a one man operation, it was all my money anyway. I had separate checking accounts though.
- PriJetLv 52 years ago
In the beginning stages of your business it can be quite difficult to pull a salary since startup costs are generally more than revenue. If you are the owner you can do whatever you like with the profits however the private jet is going to cost more than you think. New jets will cost you anywhere from $5 to $65 million depending on the size plus another $1 to $3 million per year to operate and fly the jet.Source(s): https://prijet.com/
- JudyLv 72 years ago
no - why would you?
- Wayne ZLv 72 years ago
A lot depends on how you are organized.
If your company is a Sole Proprietorship or an LLC, you can not be on payroll. You pay taxes on the net income of the company. What you actually take out of the company is up to you. I started an LLC in 2011. For the first 2 years, I lost money. As such I i not take any money out of the company. However, from year 3 onward, I have.
If your company is a Corporation (C or S), you must be on payroll and pay yourself a "reasonable" salary.
Obviously, starting with just a Sole Proprietorship or LLC is what most people have done.
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- Steven SLv 72 years ago