How should a new shop owner pay themselves?
Deciding on an owner pay structure involves choosing between taking a regular salary, drawing a commission on services, or taking a low salary combined with business dividends. Without a clear framework, new owners struggle to balance taking a fair cut for their daily labor with keeping enough cash in the business to fund its operations.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1Asking for a percentage of revenue generated instead
- 2Negotiating a fixed retainer plus a performance bonus
- 3Building your own account to own 100% of the revenue
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“They are offering me 20% from the net profit, tell me if 20% is good to go for giving my 100% to manage their accounts.”source ↗
“I’m planning on opening a barbershop and was curious about how I should go about pay structure. It’s going to be a 6 chair shop. As the owner, how should I think about how I get paid out?”source ↗
“Should I treat myself as an employee and say take a 50% commission. Should I take a salary and all the services I do simply just feed the business? Both?”source ↗
“I’ve heard some people take a low salary and distribute dividends. Any salon owners out there that can provide any insight?”source ↗
Where this came up
People with this problem also raised
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- 2How to get a small business loan to buy an existing business
- 3Should I register a business before making any money?
- 2How to manage money as a new 1099 contractor