Owners Salary Questions

AZ PowerWash Pros

New member
So I was wondering what you guys think the correct % of income to pay out for ownership salaries?

What do you guys pay yourself based on your gross income?

For example if you make $500,000 a year is 15% of that a good salary for the owner? So $75,000...

Am I too low or too high? Just wondering what most people pay themselves % wise of gross income....
 
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I pay myself a weekly salary. It comes out to about 35% of the gross.
Asking how to pay yourself is like asking how to bid a job... you should know how much you need personally and what your company needs to make to stay profitable. LOL
 
I pay myself a weekly salary. It comes out to about 35% of the gross.
Asking how to pay yourself is like asking how to bid a job... you should know how much you need personally and what your company needs to make to stay profitable. LOL


I understand, I am just wondering what the averages are out there. I have been paying myself around 25% and it seems to be working fine but you can always put more money in savings so I wanted to make sure we are not robbing the company... And your smartassness was noted... It makes me feel good to know you can not ask questions to other power washing companies without them making you feel like an idiot. Since we are all in the same industry it seems like there might be an average. Worth a shot. And as you know, lots of people have questions about bidding jobs on this board as well.
 
"smartassness" definitely going to be using that
 
I get $200 a week. But I get a rent check and a dividend check every month, too. You don't pay self employment tax on rent and divvies...
 
I understand, I am just wondering what the averages are out there. I have been paying myself around 25% and it seems to be working fine but you can always put more money in savings so I wanted to make sure we are not robbing the company... And your smartassness was noted... It makes me feel good to know you can not ask questions to other power washing companies without them making you feel like an idiot. Since we are all in the same industry it seems like there might be an average. Worth a shot. And as you know, lots of people have questions about bidding jobs on this board as well.

I thought it was a good question to be honest. I would be interested in hearing what some have to say on this topic. You would be surprised how many business owners pay then self's way to much and end up going out of business. You can be making all the money in the world on Jobs but if your not handling it right and over paying your self it can hurt.

Great Question TY.
 
I understand, I am just wondering what the averages are out there. I have been paying myself around 25% and it seems to be working fine but you can always put more money in savings so I wanted to make sure we are not robbing the company... And your smartassness was noted... It makes me feel good to know you can not ask questions to other power washing companies without them making you feel like an idiot. Since we are all in the same industry it seems like there might be an average. Worth a shot. And as you know, lots of people have questions about bidding jobs on this board as well.

Easy killer!! Did you not see the "LOL" on the end? I wasn't trying to be a smart ass.
 
My base salary is around $80k. The rest is dividends. BTW, my base has been the same for a very long time.
 
I pay myself EXACTLY the same amount every month no matter how good or bad things are. You have to wrap your head around the idea of having tons of money coming in some months and being disciplined enough not to keep it for yourself! I figured out what I gross for the stuff I do and pay myself a percentage of that and keep my dirty paws out of the income from employees. The company gets that and uses it for equipment and chemicals. Someday (probably soon) I'll tap into the other income but for now I like to remain very safe and I like the feeling that I need to get out everyday and make money!
 
TY get a Tax Attorney, your Married. The IRS loves for you to file together. Thats a Mistake right out of the Gate which most CPA will have you do. Second if you have Family members and your making enough and do not have the deductions your can Gift or salary the money to a Spouse to avoid legal Employment Tax and stay out of a Bracket that makes you pay more.

Look I'm not and attorney, I just know I have owed as much as 700,000 in back Taxes. Yeah some None believers here I'm sure but trust me they have been mailed around to some of my friends right here on PWI.

You do not ever want to have that kind of Pain.....get a TAX lawyer. Set your corp up right, second never own anything if your going to gamble with your business. YES there is a way you can not personally own everything and control it all. This makes all your assets that you don't have not be able to be penetrated by anyone for any reason.

Make sure you deduct and use money prior to last fiscal quarter before you give the money to the IRS. Make sure you get on quarterly estimated Paying if your not already. This will save you a headache, penalties can kill a young company like yours. Plus if you have problem people in private sector will not touch you. When they key your TIN in the flags come up.....no good.

If I have not Said it enough get a Good TAX attorney...NO CPA
 
TY get a Tax Attorney, your Married. The IRS loves for you to file together. Thats a Mistake right out of the Gate which most CPA will have you do. Second if you have Family members and your making enough and do not have the deductions your can Gift or salary the money to a Spouse to avoid legal Employment Tax and stay out of a Bracket that makes you pay more.

Look I'm not and attorney, I just know I have owed as much as 700,000 in back Taxes. Yeah some None believers here I'm sure but trust me they have been mailed around to some of my friends right here on PWI.

You do not ever want to have that kind of Pain.....get a TAX lawyer. Set your corp up right, second never own anything if your going to gamble with your business. YES there is a way you can not personally own everything and control it all. This makes all your assets that you don't have not be able to be penetrated by anyone for any reason.

Make sure you deduct and use money prior to last fiscal quarter before you give the money to the IRS. Make sure you get on quarterly estimated Paying if your not already. This will save you a headache, penalties can kill a young company like yours. Plus if you have problem people in private sector will not touch you. When they key your TIN in the flags come up.....no good.

If I have not Said it enough get a Good TAX attorney...NO CPA
 
Currently, I'm paying myself very little. But, I have a company car, gas, meals, and also collect a rent check for my home office, which just so happens to be the same amount as my mortgage. Amazing how that worked out huh? hahaha Just be smart and don't try to do anything that will alarm any of the IRS. They love to be able to show who is in charge and make you jump through hoops. Plus, with the bunch we have in Washington right now, they will be looking for every penny they can find.
 
Okay I have a question also. Do you put your yearly salary in your operating costs. For me it is about 21k for insurance fuel advertising etc. If I want 30k as a salary does my operating costs go to 51 k ?
 
I get $200 a week. But I get a rent check and a dividend check every month, too. You don't pay self employment tax on rent and divvies...

Very good advice Russ.

We've tried to pay ourselves enough so that the confiscator doesn't look at our returns too hard. Our salary has been the same for the past two years.

We also pay Fayth the max each year and subcontract a lot of work to Chris and Jill. They have two dependents.
 
Very good advice Russ.

We've tried to pay ourselves enough so that the confiscator doesn't look at our returns too hard. Our salary has been the same for the past two years.

We also pay Fayth the max each year and subcontract a lot of work to Chris and Jill. They have two dependents.

It didn't work.

We just finished an audit for 2009.

This was the easiest one yet. No clearing out an area for the occupying force to take over our home for days at a time like the last one. This was a phone audit that took hours over a period of days instead of days over a period of weeks.

All said and done, we owe $126.00 for failing to report a $250 stimulus check that we got for some reason or another in 2009.

They went through almost everything line by line. Twice we had to correct their math.

When it started they were claiming we owed $6k additional.

It pays to keep good records.

I will be glad when the day comes when we are a free nation again and federal taxes are raised via levies on imported goods and the other legal ways the founding fathers built into our constitution and our taxes are used for defense, infrastructure, commerce and the justice system as prescribed by our founding documents.
 
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