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Full timers-how do you pay yourself ?

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Forum topic by daveintexas posted 03-24-2009 07:18 AM 4273 views 2 times favorited 25 replies Add to Favorites Watch
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daveintexas

365 posts in 3342 days


03-24-2009 07:18 AM

For you guys that are full time, or part time and in serious buisiness.
How do you pay your self??
Do you just take cash that is left over at the end of the job?
Do you write your self a check each month? IE like a salary.
or some other way ??

Thanks
Dave


25 replies so far

View Woodchuck1957's profile

Woodchuck1957

944 posts in 3230 days


#1 posted 03-24-2009 07:35 AM

First you have to make a profit, pretty tough to do nowdays.

View TopamaxSurvivor's profile

TopamaxSurvivor

17672 posts in 3142 days


#2 posted 03-24-2009 07:38 AM

Depends on your business structure. In a proprietorship all of your profit will be your salary subject to social security and medicare taxes in addition to income tax. In a corporation or LLC, you can pay your self a salary keeping the social security and medicare taxes lower and take dividends which are only subject to income taxes. The SS & medicare tax is about 12.5% off the top of every dollar. People talk about their income taxes, but that is the real monster. Employers pay half and it is just a number on the w-2,so most people don’t really ever notice the real boogyman.

-- Bob in WW ~ "some old things are lovely, warm still with life ... of the forgotten men who made them." - D.H. Lawrence

View 's profile

593 posts in 3438 days


#3 posted 03-24-2009 06:12 PM

Woodchuck1957 we all already know you got burnt pretty badly when you were a pro in the industry, this is getting old. You should remember that there are plenty of people that ARE making money in this field nowadays. Your answer doesn’t apport anything to the discussion, maybe if you tell Dave what did you do when you worked as a woodworker this would help.

Dave, unfortunately I’m not in a position to answer you now but I’m sure many other will do.

View oldskoolmodder's profile

oldskoolmodder

799 posts in 3146 days


#4 posted 03-24-2009 06:49 PM

I agree with EVERYTHING you said JoJo. I’m getting tired of WC coming in with NOTHING to add that’s productive in threads. Just because he didn’t make it, doesn’t mean other people aren’t doing ok. The I’m better/smarter than you attitude is WAY old.

That said… I have two jobs, the main job is as a chef. That makes my money to be able to provide for my family and allow my woodworking hobby. The second job is actually side jobs in woodworking. When I make money that way. I take very little actual money from the job, usually investing in different tools I need or want. If we are traveling, that money from side jobs might go to pay for the whole trip, or at least a good majority of it. But you have to think about what it costs you per hour to operate your business. Rent, Electricity, insurance?, cost of supplies to get a job done, gas to get said supplies… Te actual hourly rate is probably far less than people would like to make, but if they are happy doing it, which some here obviously aren’t, then the money may not matter as much.

-- Respect your shop tools and they will respect you - Ric

View NY_Rocking_Chairs's profile

NY_Rocking_Chairs

507 posts in 3063 days


#5 posted 03-24-2009 06:54 PM

Like oldskool this is my part-time hobby business. So I price the jobs accordingly to cover materials, expenses and then add some in for my time. 90% of the extra money goes right back into the shop for that new tool or toy.

-Rich

-- Rich, anybody want a peanut?

View Moron's profile

Moron

5032 posts in 3359 days


#6 posted 03-24-2009 07:13 PM

I dont personally, think I’ve ever been paid.

The truck, fuel and maintainace gets paid.

The building and heat/hydro gets paid

The tractor and equipment maintenance bills get paid, phone bills are paid and dog food is paid, portion of the property taxes get paid, driveway/parkinglot maintenance gets paid….......but I dont get paid.

taxes are a neccassary evil because we need roads, schools, universities, infrastructure etc …................but I havent seen too many people excited about paying more taxes and taking home less money.

In Canada, we are taxed to death. property tax, business license tax, pet license tax, cigerette tax, booze tax, gasoline tax, health tax. luxury tax, death tax, income tax, inheritance tax, school tax, ,,,,,,,they even tax stamps. ............and then add on the license fees for truck plates, guns, pets, ............it just doesnt end!!!!! Buying peanuts is even taxed but only if they are salted because salted peanuts are a luxury.

better off just leaving it in the bank, throwing what you can at Tax free savings accounts,............

whats blue and sleeps six…............a city work truck

But I dont get paid.

I’m by no means an accountant, but I dont think you get taxed on money never spent/withdrawn (or at least not at the same rate as “personal income tax “)...............so why would one to get paid?

If I make too much money, I buy something, charity, maintain something, .........re-do the hydraulic hoses on the tractor…......?......anything is better then where the Feds waste it

-- "Good artists borrow, great artists steal”…..Picasso

View Brad_Nailor's profile

Brad_Nailor

2539 posts in 3423 days


#7 posted 03-24-2009 07:23 PM

Thats the situation I am in as well. I have a full time job that pays my bills, and my woodworking is a hobby first, making stuff for myself and my family. I will take commissions from friends and neighbors but even then I usually only make back my cost plus a small profit, and like you guys I roll it right into my shop. I found that when I worked full time in a cabinet shop it kinda took all the fun out of woodworking, with all the deadlines and pressure, and people wanting to paint perfectly good mahogany. The perfect situation would be hit the lotto for a big score, then you can build an ultimate shop right next to your huge house and then just build stuff you want to…who cares if you make a dime..but back to reality!

As far as Woodchuck goes, in the words of the great 21ST century poet 50cent, ” Sunny days wouldn’t be special if it wasn’t for rain, joy wouldn’t feel so good if it wasn’t for pain” Just think of him as our little Lumberjocks rain cloud…. spreading negativity and identifying faulty trunnions.

-- http://www.facebook.com/pages/DSO-Designs/297237806954248

View dennis mitchell's profile

dennis mitchell

3994 posts in 3780 days


#8 posted 03-24-2009 07:53 PM

Sawdust…I get paid in sawdust. Breath it. Eat it. Shi…well you get the point.
It is real simple for me. I have expenses and taxes. The other twenty dollars I’m saving for a new belt sander. Actually I get to keep what ever is left after I pay my bills. Which I more than many who are employed in wood shops around this area.

Woodchucks experiences are a valid part of being self employed in this industry. I need the reminder that many people fail at this and that it is not anywhere as easy as many people think. The best cabinet makers I know have failed more than once. Hurray for pessimism. I have to remember that the people who brought this economic collapse on us where the optimist. I’m very thankful I did not follow the experts advice and borrow a bunch of money to”grow” my business. I’m still making it day to day. Many others have done the bankruptcy dance. Many of those old farts that passed their skills along to me just happened to be pretty grumpy. I might be catching a case of it too.

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Brad_Nailor

2539 posts in 3423 days


#9 posted 03-24-2009 08:06 PM

Barry, after I read your post I got a headache.. :o)

-- http://www.facebook.com/pages/DSO-Designs/297237806954248

View ajosephg's profile

ajosephg

1878 posts in 3027 days


#10 posted 03-24-2009 08:10 PM

When I was a small business owner (6 employees) I kept the business money totally separate from personal, and used Quick Books to keep track. I wrote myself a check from the business bank account and charged it to owners draw which reduces the owner’s equity.

The amount I paid myself varied from month to month depending on profitability. Paying yourself with the amount of “cash” left over can be dangerous because there will be future expenses like inventory replacement, taxes, and on and on. What I’m saying is that at the end of the month you might have a lot of money in the bank, but it isn’t all profit. Also some cash should be reserved for unexpected expenses.

-- Joe

View TopamaxSurvivor's profile

TopamaxSurvivor

17672 posts in 3142 days


#11 posted 03-24-2009 10:20 PM

OOps! Sorry about the mis-info I made. LLC is not a corporate entity for accounting purposes. Seperate accounts for business and personal are essential if you are a fulltime operation. I don’t think it matters much as a hobby operator as long as you declare your income. One thing that is easy to do is think you have money when you are handling a lot of it. THEN….. all the bills on the employees show up :-))

-- Bob in WW ~ "some old things are lovely, warm still with life ... of the forgotten men who made them." - D.H. Lawrence

View daveintexas's profile

daveintexas

365 posts in 3342 days


#12 posted 03-24-2009 11:34 PM

Thanks to all for the replies. I am a one man shop, my shop (on my property), my equiptment and tools are all paid for, and I have a decent supply of lumber and sheet goods in stock, all of which are paid for.
So my overhead is very low.
At present I have been taking 50 percent of the profits and investing the other 50 percent back in the buisiness.

Thanks again,
Dave

View Craftsman on the lake's profile

Craftsman on the lake

2523 posts in 2904 days


#13 posted 03-24-2009 11:57 PM

Well, lots of answers here. I’m retired.. once and awhile I get a job. This is how I pay myself. I get the materials, use them, give the person the bill. Get the money, and put it in my pocket. Then I go home.

Sorry, couldn’t help it. ;-) For those of you doing this for a living I guess it’s a bit more complicated. I hope you get your answers here. Unlike me there are people who obviously have experience.

-- The smell of wood, coffee in the cup, the wife let's me do my thing, the lake is peaceful.

View ajosephg's profile

ajosephg

1878 posts in 3027 days


#14 posted 03-25-2009 01:44 AM

If you are trying to make a living doing this I’d suggest with connnecting up with SCORE. This is a free service provided by retired small business owners.

You can be the greatest craftsman on earth and still go broke if you don’t handle the business end correctly. Even though there are many present and past small business owners on this site there is no way that we can give you all the info you need.

No disrespect intended, but your original question and follow on comment tells me that you have a lot to learn. You need a plan now!! The old saying is true – If you don’t have a plan, you plan to fail.

-- Joe

View Moron's profile

Moron

5032 posts in 3359 days


#15 posted 03-25-2009 02:25 AM

honesty is everything and if truth be known

I get a “retainer” thats non refundable…...........it’s about 10% of the total amount of a guesstimate of the job and it guarentees “my time”.................., thats it , just my time and for that retainer you might might wait a year or more to get drawings, in between the client and I talk…................a lot…........and thats part of the retainer.

and if we agree

then peoples dreams are one step closer to reality.

so few, so little time

I feel bad.

-- "Good artists borrow, great artists steal”…..Picasso

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