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How Do You Pay Yourself as a Contractor and Business Owner?

Updated: Sep 16, 2023


For those entrenched in the world of painting contracts, a recurring question that we come across almost every day revolves around financial empowerment. Specifically, “How do I pay myself as the owner of my business?” This is a question that seems to bewilder many, but today, let’s break down this conundrum and shed some light on it.


The Essential Mantra: Make More Money

Before diving into the nuances, here’s the foundational principle - you need to make a lot of money. Sounds repetitive? But bear with me. Why do you, as the business owner, need to focus on this? Simply put, you're the one taking all the risks.


It's a painful truth that many business owners, especially those in the initial phases, often find themselves in a situation where everyone gets paid except them. This mindset is not just detrimental, but in plain words, it’s lunacy. If your employees are making more than you, then there’s a foundational problem in your financial structure.


However, an exception might be your salespeople. Ideally, a good owner wants their sales team to make good money because that indicates the business's growth and health. But remember, the risks and headaches come to you, and you should be compensated for that.


The Value Proposition: Quality Over Quantity

This brings us to the value proposition. No, contractors shouldn't just make money for the sake of it. You should be compensated because you provide high-quality work. Every so often, we come across comments arguing that contractors should only make good money when they deliver quality. And they’re right. If you're not adding value, meeting commitments, and delivering excellence, then you don’t deserve the top dollar. But if you're doing all this while maintaining integrity, then why shouldn’t you be the top earner?


Compensation Structures: The Salary Approach

Onward to the next crucial element - how should you compensate yourself? Beyond making good money, consider adopting a salary structure. Now, before you recoil at the notion of 'salary', it's not the vegetable you're thinking of. Jokes aside, a salary is crucial because it quantifies the immense behind-the-scenes work you do. From marketing to recruiting, mentoring, and tackling administrative tasks, being a business owner is exhaustive.


Our stance is firm: irrespective of your business stage, your baseline salary should be no less than $100,000 annually. This might sound ambitious, especially if you're new or face inconsistent work. However, instead of getting bogged down by excuses, ask yourself, “Why not me?”


Segmenting Your Pay: Field Work vs. Administrative Duties

One perplexing area for many is segmenting their pay, especially if they're still involved in on-ground, fieldwork. Here's a simple strategy: pay yourself what you'd pay a foreman doing the same job. This allows accurate job costing and ensures that when you transition out of fieldwork, you have a clear financial blueprint.


Crunching the Numbers

Now, let’s get to the exciting part - the math. How can you ensure you make your desired salary while still pricing jobs effectively? It’s about finding the sweet spot where you're charging adequately for your man-hours, considering overheads, and ensuring a healthy net profit.


For solo operators, it can be a balancing act, but with the right strategies, tools, and a shift in mindset, achieving this is within reach. Consider using tools like our financial calculator, which helps you set your hourly rates to match your financial goals.


Conclusion

Being a contractor doesn’t mean resigning to financial uncertainty. With the right mindset, tools, and strategies, you can ensure that you not only make money but make it sustainably and ethically. The journey to financial empowerment begins with a simple step - understanding your worth and making sure you’re compensated for it. So, roll up your sleeves and get to work, because a prosperous future awaits.


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