Like every woman I’ve ever met, I wear a lot of hats and it’s not always easy to swap one out for the other.
HI, I'M Jodie
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Something I find really upsetting is when I speak with business owners, and they tell me that they’re not actually paying themselves a wage at all and never have it upsets me because why else have we started a business if it’s not to create a career on our own terms? What and why else are we doing it? We’re not a charity. No doubt the suppliers and other staff are being paid. So why aren’t you paying yourself? So today I’m going to dive deeper into this topic and tell you why you should be paying yourself a salary.
Now I do need to start off by telling you that I am not an accountant or a financial advisor. So I’m giving you my opinion. And I do recommend you have a chat with your financial advisor to see what works for you and your unique situation. But I want to talk about paying yourself in your business because it’s something I see so commonly with the members of my programme online store success and even with friends that have business who are not paying themselves anything. And after being in business for what feels like 100 years, I know how important it is for a number of reasons to pay yourself a wage.
Now when I talk about wage, this will depend on the income and the profits coming through from your business. And it can be just a small symbolic amount that automatically goes into your account from your business account to your personal account each week and you issue yourself a pay slip and we can start out with a small symbolic amount not only just to make yourself feel better about all of the work that we do in our business and that you are being rewarded for it, but just to sort of send out that energy around knowing that this is a real life business and not treating it like a little side project. Also by giving yourself a pay slip, you will be able to go and apply for a credit card apply for a phone plan, apply for a home loan or whatever it is that you might need to have a credit check for because if you’re not paying yourself anything for a long period of time and then one day you turn up and say I want to you know get a credit card from my business or even personal and they will sort of look at you and say well what proof do you have that you actually have employment and are able to pay this back?
A sidenote my business is set up as a company so I employ myself as a as an employee of the company and the company issues in me a pay slip every week. I mean in actual fact is me going into Xero and I’m an employee in there and issuing myself a pay slip together with my other staff however, your situation might be different. So do double check with your accountant but having payslips is really important if you have life outside of your business that you might need to need money for. So that’s one thing. Also there can be resentment and, and burnout can build if you’re not actually paying yourself a wage because after a number of years, you’ll turn around and think what have I got out of all of this? Nothing. If you’re paying yourself even just a small nominal amount each week, you know that you’ve been getting something for all of that hard work and hopefully as your business, sales revenue profits increase, you can increase your wage as well.
Also, you need to consider what it would cost to replace yourself and your business, so if you weren’t working in your business, and you had to hire somebody else to work and run your business for you, how much would that cost? Because ideally, that’s how much you would be paying yourself, the fair market wage or salary, that you would have to pay someone else if you decided to step out of your business, for whatever reason, you know, because it’s not, we shouldn’t be working for free. Because if you have to replace yourself, you’d have to pay someone else to do those tasks and manage the business. And that would cost money. So right now, if you’re running and working in your business, you should be paying yourself that money.
Now, I’m a friend and also a huge fan girl of Denise Duffield Thomas and she talks about money blocks that entrepreneurs often have. Because while in a practical sense, there might be enough money in your business to pay yourself perhaps it’s an emotional or some sort of block, money mindset block where you feel like you don’t deserve to be paid. So if you think that you fall into that category, I definitely recommend you go away and Google Denise Duffield Thomas if you don’t already follow her, sign up for her newsletters, and also listened to her podcast. And she’s amazing and talks specifically to those problems, those mindset problems, because often that’s what it is. Now, again, I encourage you to make sure you are paying yourself a wage in your business. Because you are signifying to friends, family, the universe, that this is a real life business. This isn’t just some little side hustle, or some little business that often well meaning friends and family will call it which can be soul crushing, if you are paying yourself, you yourself will step into that confidently and say no, this is a real business.
This is you know, I am employed by the business, I am paid, I pay myself and you will feel better about it and that feel good energy will attract more of it. So today, like I said, I want you to encourage you to go away and look at your business financials, have a chat with your accountant or your financial adviser, and see what your starting point is to be able to start paying yourself a salary because I’m sure you pay all of your other suppliers on time and any other contractors or team members that you have. It’s time to start prioritising yourself and paying yourself in order to scale your business. And one last tip I have for you is to keep track of any money that you loan your business. So for me, like I said, I have a company and I’ve often had to loan personal money to the business. And that is all tracked via my Xero bookkeeping and it tells me I have a director’s loan with a balance because maybe down the track your business takes off and then that money is sitting in your account, you need to be able to repay yourself without all of the different tax problems that might you might incur by just taking money straight out of your business. So keep a track of that even if it’s in an Excel spreadsheet for now of any money that you are lending your your business personally. So hopefully later down the track, you can start repaying yourself that money.