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Archive for the ‘bookkeeping’ Category

As a work at home business owner, you have a lot of financial responsibilities–vendors and suppliers to pay, invoices to track, sales to project. It can be easy to overlook one very important financial item: paying yourself.

Even for a sole proprietor, it’s important to pay yourself a salary. In essence, it means knowing what you want to make from your work. As Kristi Ashley, the owner of Tickety Bu, explains, “You must pay yourself a salary. Must. You don’t always have to take it, but on paper you should show your salary and then the loss if you can’t actually pay yourself what is your full salary. It’s important to have that down and work your biz around that reality.”

What does that mean, exactly? Figure out what you want or need to make each month to cover your bills, to save up for a special vacation, to replenish your supplies–whatever you want your business to do, from a financial standpoint. That’s your sales goal. Now work backwards from that: evaluate your sales, perhaps on a weekly basis. Are you on track? What’s selling and what isn’t? What’s your most profitable product line? Are your prices set correctly? Where should you be concentrating your efforts?

Paying yourself a salary can be as simple as withdrawing a set amount of money from your business account once or twice a month, just like a regular paycheck.

Not able to pay yourself in a given month? Maybe it’s a slow month because you’ve been building up inventory for the holiday season or a craft show. It’s important to be honest with yourself about why you’re not meeting your sales goals and if it’s truly a temporary situation with sound business reasons, or if you need to reassess your business model, your prices, your marketing, or some other fundamental issue.

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