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New business. How owner is paid.

Discussion in 'Business Fundamentals' started by JMHConstruction, Dec 17, 2015.

  1. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,072

    So I ran into a guy I used to work with at Home Depot. For the last 5 years he's been working for a company hanging sheet rock. He told me he was getting more and more side jobs for cash and wants to start his own business.

    Long story short he was asking how much he would make after business expenses. I told him I payed myself salery no matter how much work I do or don't do(within reason of what the company brings in) and that if we're doing well I give myself "bonuses" (usually quarterly). He was worried that he wouldn't make enough to do that.

    He called me today and ran an idea by me. He asked what I thought about a commission salery. Say he sells a $1k job, he'll get say 25%. I personally don't like the idea, but starting out I wasn't sure how it would work out. What do you guys think?
     
  2. Whiffyspark

    Whiffyspark 2000 Club Member
    from SOMD
    Messages: 2,402

    If he's working for himself with no employees it's his money. If he's a sole propetior(sp) your money isn't really split up business vs personal. He'd had to be an employee of the business for it to matter.

    Just my opinion.

    I take 30% of what I make and put it in a business saving account for tax/equipment etc. Then I pay myself a set salary. Everything else stays in business checking account.

    Just helps me manage money better
     
  3. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    There was a guy on LS He would charge say 1,000.00 for a job and have 700.00 in material ,he would have the check made out to him and he would keep the whole 1000,then he couldn't figure out why his company was in debt.
     
  4. leolkfrm

    leolkfrm PlowSite.com Addict
    Messages: 1,419

    tell him to put it in his wifes name for minority benefits, then collect unemployment when not working
     
  5. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,072

    That is exactly how I do it. I think he's worried he worried he won't make enough (or wants too large of a salery) to make that work. Me personally, it makes me work harder. I know what I want to make and the net sales I have to get to make that.
     
  6. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,072

    This is what I'm afraid he will do. He is the nicest guy you'll meet and works harder than most of the guys I've worked with, but he's not business smart. I told him to read and watch every business thing he could get a hold of. I wish I would have taken a business class, but after my first year I almost lost my now wife, couldn't pay my bills, and was so in debt I was forced to change. Now I consider myself a fairly good business man, but wish I hadn't taken the road I did. Hope he does alright. It looks like it's going to be a slow winter, maybe I can help him a little get everything figured out.

    Thanks for the quick responses. Keep the opinions coming!