In addition to the salaries of your employees, as an owner you need to choose your own salary as well. You may not have been able to pay yourself when you started out, but you should think about your salary at least once every couple of months.
To start, you should regularly review your company’s cash flow to determine a salary level that you can sustain while keeping the business profitable. You shouldn’t be changing what you’re paid every month to drain all of the money out of your business accounts, but you also shouldn’t be taking only what you can afford in good periods. Come up with a reasonable salary that you can maintain using credit even during slow months that will still allow you to make money in good months.
Another factor to consider is the market. If you were working for someone else, what would they pay for your skills and knowledge? Check around and discuss salaries with small business groups and colleagues that you feel comfortable approaching, especially those in your industry and in your local geographic region. Sometimes the Department of Labor and Small Business Administration websites list salary information for the local area from national compensation surveys.
One last thing to consider, if you don’t take a salary for a while the IRS may view you as a sham enterprise aimed at avoiding taxes, and that can lead to a bad tax situation. If your business is going to take some time to get off of the ground, talk to an accountant to make a plan that works for both you and the company.