At the end of the day, you are the most important employee in your business, whether you are working solo, or whether you have a team, your business cannot function without you, you are the heart and soul of it. You have to start making yourself a priority and taking care of yourself financially!
When you pay yourself, even if it’s just a little bit at first, you will have an entirely different mindset that you carry with you and you’ll show up in your business with a different energy. You’ll show up feeling valued, respected, and more confident in the work you do.
When you value yourself, you’ll send out that “I’m worth it” vibe, and others will value you, too. You’ll own your worth, stand confident in your pricing, and attract clients to you who also value your work and are willing to invest in the services you offer.
PAYING YOURSELF IS HOW YOU SHOW YOURSELF APPRECIATION FOR THE VALUE YOU BRING TO THE TABLE.
First, I want to tell you that if you are not yet paying yourself, or you have no idea how to do this, you’re not alone. This isn’t the kind of thing you learn in school—even most MBA programs don’t teach this! Yet, so many women that I’ve worked with over the years feel shame around not knowing how to do this. If that’s you. . . girlfriend, you are in good company here. There is no shame in not knowing the answers and the fact that you’re reading this says that you’re smart and willing to learn. Be proud of yourself for that!
In this article, we’re going to get into this a little deeper and talk about:
- How to set up your business financials to make it easy to start paying yourself
- How to know how much to pay yourself
- How to actually pay yourself so that you are being compensated for your value
Whether you’re brand new to business or you’ve been killing it for a while now, I want to help you get to the point where you feel comfortable with numbers, are making decisions that lead to profit, and that you’re paying yourself what you deserve!
REVENUE VS. PROFIT
First, let’s address the difference between revenue and profit. Yes, these are accounting words. But they are important because words matter!
In the world of traditional employment, you have gross pay (before taxes) and take-home pay (after taxes). In the business world, when we talk about revenue, we’re referring to the amount of money coming into the business in the form of sales. It sure would be great if you got to keep all that money, but unfortunately, you don’t. To keep the business running, you’ve got expenses to pay—office space, internet, phone, computer software, printer paper, business cards, insurance, etc. What’s leftover is your profit (the amount you get to keep).
But wait. . . you don’t get to keep all of it. Not yet! You still need to set some aside for taxes, because the government wants their cut, too! And if you’re smart (which I know you are!) you’ll set a little extra aside for emergencies, preferably a minimum of 3-6 months worth of operating expenses, just in case you end up in the hospital or something and can’t work.
FIRST THINGS FIRST. . . YOUR BUSINESS ACCOUNTS
Checking Account – If you haven’t already, you’ll want to open a dedicated checking account for your business. This is where all of your income from clients will be deposited. This is also the account you’ll use to pay all of your business expenses, including writing yourself a paycheck (or transferring money from this account to your personal account, which is the same concept).
Credit Cards – many business owners prefer to use a credit card for the perks that they provide. If this is you, fine. Just make sure that you’re paying the card each month from your checking account.
Savings Account – This is a separate account that you’ll use to save for taxes and emergencies. My suggestion is that, every time make a new sale, transfer a percentage into this account straight away. How much? That’s up to you, but a good round number to aim for is 25%. If that sounds like it’s too high to start with, choose a percentage that feels good to you and increase the number every couple of months as its comfortable.
Taking the steps above is going to:
- Make sure that all of your financials are in one place and keep your money organized.
- Ensure that you have a nice cushion to give you financial peace of mind.
- Make it easy to manage your money.
- Give you a financial “snapshot” that allows you to see how much is coming in, how much is going out and what is left over for you to keep (aka pay yourself).
Now, if there isn’t anything left over, you’ve got some choices to make. You can either:
- Cut some expenses out of the picture
- Work more / take on more clients
- Rethink your pricing strategy (I have some tips for you inside this pricing guide on how to do this)
Here’s the thing. . . you have to start looking at your business through the lens of making a profit because you deserve to get paid! You are your most important employee. Your business cannot run without you. It needs you there. And it needs you in good high vibe spirits. And in order to be in that good energy and to feel like you are a valuable part of your business, you need to be compensated just as you would expect to be if you were working for someone else!
And only YOU can pay yourself. If you’re not doing that already, you need to get into the habit of making yourself—and your paycheck—your number one priority!
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HOW TO PAY YOURSELF WHAT YOU NEED
If you haven’t already read my blog post, How to Set Money Goals for Your Business, start there! And definitely download the FREE Pricing Guide (in the green box below) for the worksheets to guide you.
Then, start by making a commitment to pay yourself every single month. No questions asked. Now I realize that in the early years of business, that is not always possible or feasible. Maybe you’re just starting with a side hustle. Or maybe you’re not quite to the place where you’ve got an abundance of money coming in (keep listening to the Profit Party podcast or join me in one of my coaching programs and we’ll get you there!!!). Until then, get into the habit by paying yourself a weekly, bi-weekly, or monthly salary of whatever you can afford. Start with $1 if that’s all you can manage. Then, bump it up to $10, then $100 then $500. . . and keep going. It’s not about the dollar amount, it’s about creating that brain pattern and way of thinking that says, “I deserve to get paid for the valuable contribution I’m making.”
Not only is this going to benefit your personal bank account, (because paying yourself requires you to take money out of your business checking account and deposit it into your personal bank account, just like you would a check from an employer), but it’s also training you to align with the energy of receiving money for the valuable work you do! As you get comfortable receiving money from your business, you’ll become more comfortable receiving money from others, too!
THE BOTTOM LINE
You absolutely need to take care of yourself first. You need to value yourself as an employee and as an important part of your business. You need to honor and respect the work you do. And when you do, you’ll become a magnet for the people who value and respect you, too.
It’s both a mindset shift and a mental habit that takes a bit of time to master. But it’s worth the effort. You’re worth the effort! If you’d like a little accountability and help to work through your money mindset blocks, owning your worth, and learning how to package your value into premium offers that sell. . . check out my private and group coaching programs!
And, if there is anything I can do to support you, I’m always here! xo
**I am not a tax or accounting professional. The information provided in this article was written for sole-proprietors and LLC entities (as that is what most of my clients start off as) and is intended to give a basic overview of business finances. Please consult with your tax or accounting professional before applying any of the advice laid out in this article.
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Love you to pieces,