WRITTEN BY VENUS MICHAEL ON .
If you are an entrepreneur considering starting your own business, or if you’ve already opened your business but you aren’t sure how to facilitate its growth, one of the best pieces of advice out there is to pay yourself first. Learning what this means and putting it into practice is the cornerstone of your small business’s success.
The term “pay yourself first” describes a money-saving technique designed to help you save money to cover your own long-term needs and wellbeing. To put it as simply as possible, it means giving yourself a paycheck. Often, business owners tend to put all of the revenue they generate back into the business, whether they are upgrading their equipment, purchasing new inventory, hiring more employees, or any other expense. Unfortunately, many small business owners suffer when they fail to give themselves paychecks before reinvesting or spending the money their business generates.
The simplest way to pay yourself involves issuing yourself a paycheck (transferring funds into your personal bank account) on a set schedule that you determine. This money should not be used for the business; instead, it should be used for your own personal needs, including your mortgage payments, groceries, personal transportation, vacations, and more. Of course, there are other ways to make sure you are paying yourself, too. These include:
If the idea of paying yourself first seems tantalizing but you aren’t sure where to start, hiring a professional bookkeeper who is focused on helping small businesses save cash is your first step. Over time, you’ll find that you can not only pay yourself enough to accomplish your personal goals, but you can build significant savings in your business account, too.