Making Sure You Get Paid as a Business Owner

Getting paid consistently is one of the biggest challenges for any new business owner. When you work for yourself, you no longer have the steady paycheck that comes with a traditional job. Instead, you rely on the cash flow of your business to pay yourself. This can feel scary and uncertain, especially in the early days of building your company. However, there are strategies you can use to ensure regular income.

Choosing the Right Business Structure

Your business structure affects how you can pay yourself. If you form an S-Corporation or C-Corporation, you are legally required to take a reasonable salary. This guarantees at least some steady income. With pass-through entities like sole proprietorships, partnerships, and LLCs, you have more flexibility in how you take money from the business. You can choose to pay yourself a salary or take owner's draws as needed based on cash flow.

Establishing an Ideal Pricing Strategy

One of the keys to getting paid consistently is having an effective pricing methodology. Start by determining your target annual income goal. Then calculate your desired profit margin per project or service. Divide your income goal by your anticipated number of monthly projects at your profit margin to get your minimum pricing rate. When setting prices, be sure to factor in all overhead costs in addition to your profit goals. This equation ensures your rates align with your income requirements.

Offering Payment Plans

Extending payment plans to customers can help ensure consistent cash flow. By breaking project costs into smaller regular payments over time, clients have an easier time budgeting for your services. This leads to higher conversion rates and guaranteed periodic income for your business. Structure payment plan terms, automated reminders, late fees, and policies upfront before work begins. Online invoice software makes setting up and managing payment schedules simple.

Accepting Multiple Payment Methods

Getting paid faster starts with providing a range of payment options tailored to customer preferences. At a minimum, allow customers to pay via credit card, bank transfer, Venmo/PayPal, paper check, and automatic bank debits. The more choices you give, the easier it is for clients to pay on time. Make sure your invoices and payment reminder include user-friendly links and details for all options.

Consistent income is possible as an entrepreneur when you implement the right mix of business best practices. Do your homework on legal structures, pricing, payment plans, and payment methods to ensure you have steady cash flow to pay yourself every month.

I write about the tools of crms to help other small businesses and freelancers who are getting started themselves or just want to gain more knowledge. I hope that the information I provide helps you grow your business!