In this post, I’m going to tackle one of the most difficult areas of financial planning. This single area – this one single thing – will make or break your financial future. Today’s topic is how much should you pay yourself as a small business owner.

No matter whether you are just getting started in business or are a seasoned business owner, you need to revisit the method by which you are paying yourself. Perhaps, in the initial days of your business, you went through a period of time where you paid yourself only if there was a surplus in the business accounts. However, as your business matures and as cash flows become more predictable, you must gain control of your withdrawals. You need to plan on how to pay yourself as a business owner.

Richard Branson, famous entrepreneur and owner of Virgin Airlines, once said, “Never take your eyes off the cash flow because it is the lifeblood of business.” I agree with that. I would say the same is also true in your personal finances. However, I actually propose that the amount of cash flow which passes through your personal accounts is more important than the cash flow that passes through your business accounts. Therefore, personal cash flow matters to the business owner a great deal.