[rbriggs]

As owners, how much are you taking in as a salary. I am looking for a percentage, and not an actual number. Is there a standard? I have been hearing 10% of your yearly revenue is the norm. Any truth to that?

[bigviclbi]

I'd love a response on this one too. After all, I am my company's best looking and most important asset, I think I need a raise.

[cutntrim]

This'll be one of those threads that many view, but few respond. I'll bite though...18% in 2004 and 15% in 2005. I don't bring in the gross dollars that some others on here do, so I'll likely remain around 15%.

So...Rick and Vic...what % are you at?

[Dale Wiley]

Relax guys.... this is one that really is company specific.

Percentages don't mean a thing as far as owner compensation goes.

Smaller grossing companies will have owners taking 20% or more.

Company structure means some things as well. Are you getting paid rent ?? Are you getting paid lease ??

As a personal owner of the property, the corps pay me both. Vehicle?? (s)

Insurances ?? Company funded retirements ??

Small salary - large dividend ?? Large salary no dividend ??

Tax set up ?? Loan the company money personally ?? Sign personally??

Management structure and your role ??

When we have equal answers to these questions, then we can start throwing out percentages that MAY mean something.

As a business owner, and putting up with everything you have to do, you should be or aiming for paying yourself at least $ 100,000 per year in salary plus benefits, just because...

If you set that goal, you can plan back from that to get your companies growth needs and plan.

[cutntrim]

Not only is the % of income drawn highly subjective, so is the "minimum" salary an owner "should' draw. It'll depend on your own ambitions and comfort levels as to how much you draw, or feel you should draw.

On a scale of 1-10 landscapers are an "11" when it comes to guarding their numbers. Still only one % listed.

[Rick Carver]

I will give you some of my numbers,,, rounded off a little,,,, but remember that it isn't always the % of salary that means everything,,,, PERKS,,, baby,,,, PERKS!!!!!!!!!!!

When I was starting out and didn't realize that my Net wasn't my salary I was taking 100% of it (my net) in reality it was around 15% to 20% till I reached 200,000 gross,,,, then stayed around 15% up to around 500,000 gross.
From 5% to 7.5% up to 1mm.
Pretty much stayed the same to 2mm.
When we reached around 4mm, it was around .05% maybe just a little more,,,, but now you have to understand that is just my operation and I am not sure what or if there is a norm.
My perks cost also,,,,(plenty),,,, and I must say that the company I worked for paid me very well and understood how to keep a valuable and quality employee like me! ;-)

Rick

[bigviclbi]

This is why I needed to go to the seminar! I instead opted to get get my ICPI certification, which probably will mean more to me than anybody else. Any books you guys recommend for getting the basics? I am committed to getting a basic understanding of my numbers this year.

[VoodooChile]

We've always taken what we need to live.

[Bill Schwab]

The correct answer is, never as much as you are worth...But living very well and would not trade it for the world......

[johnkeegan]

I'm curious if Richard wanted to know the salary% ratios for tax purposes? As in not raising "red flags." I just recently (finally) incorporated and had similar questons. If I understand it right, there are obvious advantages to declaring "profit" as either salary (w/SSI and medicare tax) or dividend (not included). I would think the IRS would have guidelines on this but my accountant says they're rather vague. "Appropriate compensation" is what they call it.
For instance, if I pay myself a "salary" of $30K but my "dividends" total $90K, is that a problem? Now we can certainly change the name of that remainder of the profit from "dividends" to "rent," "automotive expense," "executive officers' retirement (or insurance)," or other "perks," .... but are there red flags when the owner's salary dips below a certain level?

[Rick Carver]

"" but are there red flags when the owner's salary dips below a certain level?"""

There are some for sure,,,, what you have to do is just what you are doing now,,,, go to the PRO's like your CPA and TAX attorney for this info. We can give you what works for us etc,,,, but like your doing,,,, always double check the do's and don'ts along with the how do I's,,,,

I found out that when my salary was low,,, and the company NET BIG,,,, I had lots of fun pulling from the NET from my company. BUT!
This was a corporation,,,, a seperate entitty,,,, so while I figured that I would just grab some loot for this and that it would be fine,,,, HA!,,,, Untill my accountant said if it wasn't my compensation it would be looked at by the TAX man as a LOAN to me,,,,, and so it goes.
Did this with a plan guys, so make sure yous understand that I did have a plan in place. ;-)

Sooooo, now I made sure that my Company (CLL) was owed money from me the CEO,,,, and did I mention that CLL also loaned some other Start up companies a little money to? Of course this had to "ALL" be paid back at SOME POINT!!! ----OK-----
Wonder how the value of the company looked at the end of the year when there was still money do in? It just kind of increased what was there,,, right? Even with a few payments against the loans made,,,,,,,,,

Also,,,,<<<ahem>>> prior to selling my Landscape Co.,,,, I set up for some time a detailed plan,,, (of course),,,, this was about 1.5 to 2.5 seasons out from settlement. FOLLOWING ME NOW???
My company being as strong with net as it was,,,, then adding back into the value of the company, MY compensation and MY WIFE's,,,, was all fine and good,,,,, BUT darn,,,, there was that debt owed to the company from loans that I racked up in that (planning)time frame. it just has to be accounted for somewhere,,,,,,,,,

Yup,,,, it was all part of negotiating the value and PRICE of the company.

You have to know and understand your numbers and the best way of adjusting/changing your chart of accounts,,( net & OH) to have them help you get to what ever or where ever it is you want to go.
Keeping your net STABLE is way more important then showing a HUGE NET to the tax man!!!!!!!!
If I have a stable net and a controled planned and stable OH,,, then I may manipulate what makes the best sense for ME and the COMPANY.

Man there is soooooo much that can be discussed on this subject of compensation etc,,,,, Great thread!

Rick

[rbriggs]

Rick,
Just sent you an e-mail about this topic. I guess what I was originally asking, is simply, what is the percentage of your salary, based on your yearly revenue?
Now I'm thinking that maybe a percentage of revenue alone, is not the best way to figure a salary for a business owner. If this is the case, then what is the best way to figure a salary? I know it's difficutl without specific numbers and background. However, I am not interested in any of us going there on a public thread. Just trying to keep it general.
Thanks for all the replies. You guys/gals rock!!