You've started your own business and it's doing well. Mission accomplished. What, though, do you do once it's time to determine your salary? According to Entrepreneur.com, there are a few factors to consider when choosing how to best compensate yourself.
First, think of the expenses you currently have – car payments, a mortgage, groceries etc. – and make a list. This is a critical part of the process as underestimating personal expenses is one of the most common mistakes new business owners make. You have to manage your personal finances well if you hope to do it for an entire company. Once you've balanced your expenses with how much you're willing to pull from savings, you've established a tentative salary.
Next, determine what your work is valued at. You should take into account what someone with your experience and skills would make in today's job market and what people in similarly-sized businesses are being paid for their work. Lastly, you have to look at what your business can realistically afford to pay you. Check your cash-flow projections and because many startups take a year or two to pull a profit, it may be prudent to compensate yourself on the lower end of your pay spectrum in case unexpected expenses emerge.
Many small business owners will add a small percentage to their salary for the risk and extra work that they are putting into their work, but it is up to the individual to make those decisions. Whatever you decide upon, remember it's always easier to reevaluate a salary once business is booming than to give yourself too large a compensation at the onset.