For those that have smaller companies (5-8 employees?)
What is the profit % that you strive for each year?
We are at 15% and have hit above each of the last 3 years while going through lots of growth
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That’s great Kyle! - Is your salary before or after that 15%?
I’m thinking you probably read Simple #s?
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After a reasonable salary is taken
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this is the kind of info i have been looking for, more about percentages for different parts of the business.
We are right around 11% after my salary for 2015, but I take a pretty sizable salary and all my family health care gets paid out as a biz expense, including out of pocket expenses. That’s a lot of profit that doesn’t show on the bottom line. Adjusting my numbers strategy for 2016 to take less salary and more distributions of profit. Curious to see how that will affect the numbers.
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31.43% net YTD, after my and wife’s (we’re both owners, and PT employees) salary. (2 FT employees, and 4 PT).
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That’s fantastic! Do you and your partner take market-based salaries, if I may ask?
Yes
I mentioned my thoughts on this during the webinar…
And I’m eager to hear more from others.
I’m now “watching” this thread.
(I’m really encouraged with the new setup)
This is probably a stupid question, but what exactly is a “market based salary”? How does one compute that?
pretty simple, it’s not as fancy as it sounds. basically: what would it cost to hire someone to replace you and do your job?
OK, thanks for the explanation Caleb.
NP. so basically, if you want your numbers to paint a legit accurate picture of how your business is doing, it’s key that you pay yourself a realistic salary or wage.
ie., if you work full time in your biz, gross $100K, but only take a salary of, say $20k, that will likely artificially inflate your business profit. you might show $50k of profit after all expenses (including your own salary) but you are really just gaming the numbers. on your tax forms, your biz will show 50% profit, but your artificially low salary is the reason.
12% Net after all wages paid
that’s why posting these numbers never works the way we’d like it to, there’s so many hidden variables intentional or not
“free labor” also adds distortions (mother, wife, sister child in office or son in field working for free or below realistic wage)
“free labor” of oneself too, fixing the wifi, SEO research all weekend etc etc although that’s pretty much expected to some degree for an owner
if there was a way to track an owner’s mental thoughts and all the bits and pieces done off hours it would be interesting to see what time is spent for reals, it would probably be scary lol
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