How long 4 a paycheck??

ive been open 11mths my weekly totals have doubled since help from Jrock and every1 else in here. Want 2 say thanx , but I still havent been able to pull a paycheck. Im almost at the end with my savings and all , Im wondering how long does it take to make or get a paycheck.? Should I hang in there??What could I do to get that extra boost? All the bills are getting paid now I just want that $$$…

Patience. Your on the right track.

Keep doing what you’re doing and start doing more. You must consider this time an ‘investment’. It takes time but you’ll see a return on that investment shortly.
Just how long you can wait to see the return depends on your financial status. If you’re savings is running out then you have to be smart and set a deadline where you have either started to receive a paycheck or you’ve got to move on.

I would suggest that you start paying yourself NOW (preferably as an S-Corp dividend… you are incorporated right?) even if it amounts to just $10 an hour.

If you have to, take the money from savings that you would have just spent on bills and loan it to the business and then pay it back to yourself. It is important to have real cost structures in the financials when you look at them or it becomes too easy to get lazy about costs. It will also allow you to really see what happens if you choose to work more or less.

A few weeks ago, my husband asked me how we could get a tax-exempt number. (joking) I called him stupid and told him they’re only for non-profits.

He said “aren’t we one of them”?

LOL keep the faith.

I’m 25 months in and still waiting . . . that said, we are not ravaging our savings quite yet to run the business. Wife has a 40-hour job ‘on the side’ to pay house mortgage and bills. You gotta look at your financials and see if you can siphon anything at all out of the cashflow. Be assertive, but be honest. If you need $$$ now, and business cannot spare it, then it might end up being hard decision time about something. Keep pushing those sales; find new revenue streams that are legal :slight_smile: That is our new line of thought . . . getting new ways to create revenue in our space that we pay rent for already.

We expect to hit a $10 hour payroll for me by September, if all goes right. That is only for 30 hours. It’s a start, and it will make the cashflow tighter. We have scads of new bills to pay, but the payroll I is stashed in a lock box in the office in cash of crisis. It got up to $8K last year before crisis hit and we needed the money to pay bills when we shut down for 7 months. Loaned it all back to the business.

I think 11 months is to long not to get paid. Heck, you should get something your first month.

This business is simple. Don’t try and be the next pj dom or any other giant with a beer budget. I see it all the time. Keep your fixed low (under $1000) a week and keep your prime at 60%, be a working owner and you can make some good money.

Hey up23,

I found it really, really difficult to get my sales to the point that all the bills were being paid. But to get from that point to me taking a full paycheck was a breeze. You’re doing something right if you’re making the bills… now just do more of it.

What I’m trying to say is that you’re probably past the hardest part. It’s tough to get a restaurant to the break-even point, but when you run variable costs in the 50%-60% range, the money starts adding up real fast after break-even.

Bodegahwy, I wouldn’t recommend taking an S-Corp dividend as the first method of payment. The IRS wants to see W-2 income first, and they want their payroll taxes!

Piper, As long as the business is still paying back the money “loaned” to it to start, you can have the corp paying back the loans before you take W-2 income even after the business is profitable. The loan repayments will be treated as dividends by the IRS (If the business is profitable). You can not do it this way exclusively for longer than a few years but it is the best way to take cash back out of the business in the first few years.

If the business is losing money the loss will flow to the shareholders and offset other income on their tax return or be available to offset future income if there is none from other sources in that year.

When the business is actually profitable the IRS will not be happy with just dividend payments after the initial loans are paid, but you can still keep the payroll taxes low by taking a modest wage and the balance as dividends.

Good to know. I have a shareholder loans on the books, but was under the impression I needed to take W-2 income regardless of loan payback. I guess I can change that around for the rest of the year.

I quess I have been lucky. I have been open for 13 months and I started paying myself 16 months ago, when I quit my regular job. I paid my self $1400 month for 1st 3 months before we opened. After we opened I uped it to $1800 month for 2 months and have been paying myself $2000 month since then. I am not saying I am doing great, we do $7-8k a week. I wouldn’t have been able to do this if I hadn’t been paid. Pay yourself first. I am not profitable, but cashflow makes it possible for me to get everything paid and still take home an okay check.

Nick. Im’m like you.
I’m the pimp fpr my wife. She works fulltime and brings in a good wage which pays the mortgage and bills.

I went 13 months before drawing a regular wage, took small bites here an there when needed, but now I take a regular weekly amount which goes direct to my superannuation fund. We still live off my wife’s income.

Just this week after 18 months I gave myself a 50% raise which is still behind what I envisgaed I would be taking when I did my business plan (didn’t allow for “Fools Tax”).

I think I would concur with all previous posters on other similar subjects that you don’t really see a regular or strong income for two years.

If you can take enough out to get by on for the first two years then you should be OK after that.

Dave

Piper, Check with your accountant about it. I am just repeating what ours has told me. Our restaurant is the third S-Corp business I have owned (in 19 years). We have had it now for going on 9 years. I have doen it this way with all three. I sold the first business to the employees in '94, the second is still running and third is the pizza biz.

At this point we take about 20K in W2 income (ALL of it goes into a SIMPLE plan so we pay no income tax on it) The rest of the income is in the form of dividends.

For the first 3-4 years we took no W2 income at all. We had a full time manager then as well. What my accountant told me was that for a couple of years you could post no W2 income and take the profit as loan repayments. He then advised us to start taking some income on the W2. We started the Simple plan at that point to put that income into retirement. (Setting up the Simple was pretty easy. We do our payroll with ADP and they have a pretty frictionless setup with Fidelity.)

According to what our guy has told us, if you already taking W2 wages, you can vary how much you pay yourself week to week or month to month. For example, you could take no pay at all for a while and pay yourself during the busy season. No need to increase your wage though. Just take the extra as dividends.

One good thing about W2 wages is that you can use them to completly avoid doing quarterly estimate payments. As long as the income tax is paid through withholding (W2) you can pay it in at any time of the year without penalty. This means that you could sit down and figure out your approximate tax liability in November, pay yourself that amount in one check and withhold 100% off it and be fine with the IRS. Of course, you have to pay SS on that money, so you don’t want to pay yourself more that way than you have to, but as long as you take W2 income, you might as well simlify the whole quarterly thing at the same time.

Again, I have been doing this close to 20 years, but am not an accountant. You should check with your accountant for sure as everyone’s situation can be different.

For those not familiar with this concept, are you talking aboutr a SEP . . . Simplified Employee Pension? This is a USA retirement account structure recognized by the IRS as tax deferred.

SIMPLE Plan Rules…i’ve had one for 8 years.

Still no information what a “Simple” plan is . . . . .

Savings Incentive Match Plan for Employees

Similar to a 401 K… the employee contributes and the Company matches, up to a certain amount.

Check out the pros and cons of both here: http://www.investopedia.com/articles/re … 102802.asp

But for our types of businesses, a SIMPLE is usually the way to go.

Rob T is right. SIMPLE and SEP are not the same thing.

The benefits of a SIMPLE are that you can offer a benefit to your full timers at a reasonable cost while being able to shelter a significant amount of income for yourself. You can limit the participation to employees who have been with you for a year and who earned over $5000 in the previous year AND who are expected to earn over $5000 in the current year. (You can actually require two years, but we don’t)

Qualified employees who choose to contribute to the program may contribute ANY % of their wages up to a total of $10,500. (I am pretty sure that is the cap this year). The employer matches dollar for dollar up to 3% of the employee’s wages. That means for an employee that earns 20K you are on the hook for $600 IF that employee signs up and contributes. (3% of 20K)

Meanwhile as an owner, you can also contribute from your own W2 earnings up to the cap. (There is a “catch-up” provision for people who are over 50 or turning 50 during the year that allows a cap of 12,500) My wife and I contribute 100% of our W2 earnings to the program thus avoiding income tax on those dollars.

Annual administrative costs for our program are $250. We set it up with Fidelity through ADP so the money comes out automatically. The employee chooses what funds the money goes to and has complete control.

In any given year we tend to have 4-5 emplyees who would be eligible. Of them, maybe 1-3 sign up. Despite my best efforts to get them to pariticpate, 20 somthings generally don’t “get it”.

Thank you. RobT and Piper for the info. It’s worth looking into for my shop.