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Know the best ways to pay yourself as a startup founder

Being an entrepreneur requires more discipline than expected from employees, reports Tech In Asia

Filbert Richerd Ng Tsai | Tech In Aisa 

start-up, growth, company, technology
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“How much should I pay in to us founders?” This is a common question I get when an aspiring startup drops me a message on Facebook.

It’s understandable, to be honest. Many founders still have their day jobs while some just left theirs to start their It’s a bit of a challenge to shift from having a stable cash flow to exploring a totally uncharted path.

While I do believe the work that founders do for their businesses should be appropriately compensated for, taking as compensation might not really be the wisest thing to do. Five out of six startup founders that I spoke with over the past year paid out salaries that were more than what was justifiable for founders.

Founders’ salary
 
In a while, I’ll be discussing the income tax consideration as applicable in the Philippines (which is applicable as well in most parts of the world), but for now, let’s talk about your first.

Know the ways to pay yourself as a startup founder
In a sole proprietorship, you establish the business as if it is your extension. In this case, you don’t pay your own Similarly, the income (usually measured in terms of cash) of the business is then treated as your own disposable income (in a way, salary).

The concept doesn’t really change when you go for incorporation, where you still own the business except that you share it with somebody else. But determining your fair share will be a challenge. Ultimately, the net income of the corporation (again, for most startups, this is ideally equal to cash, except for some adjustments to receivables and payables) should be split between the founders—yes, through dividends!
This is an excerpt from the article published on Tech In Asia. You can read the full article here.

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Know the best ways to pay yourself as a startup founder

Being an entrepreneur requires more discipline than expected from employees, reports Tech In Asia

Being an entrepreneur requires more discipline than expected from employees, reports Tech In Asia
“How much should I pay in to us founders?” This is a common question I get when an aspiring startup drops me a message on Facebook.

It’s understandable, to be honest. Many founders still have their day jobs while some just left theirs to start their It’s a bit of a challenge to shift from having a stable cash flow to exploring a totally uncharted path.

While I do believe the work that founders do for their businesses should be appropriately compensated for, taking as compensation might not really be the wisest thing to do. Five out of six startup founders that I spoke with over the past year paid out salaries that were more than what was justifiable for founders.

Founders’ salary
 
In a while, I’ll be discussing the income tax consideration as applicable in the Philippines (which is applicable as well in most parts of the world), but for now, let’s talk about your first.

Know the ways to pay yourself as a startup founder
In a sole proprietorship, you establish the business as if it is your extension. In this case, you don’t pay your own Similarly, the income (usually measured in terms of cash) of the business is then treated as your own disposable income (in a way, salary).

The concept doesn’t really change when you go for incorporation, where you still own the business except that you share it with somebody else. But determining your fair share will be a challenge. Ultimately, the net income of the corporation (again, for most startups, this is ideally equal to cash, except for some adjustments to receivables and payables) should be split between the founders—yes, through dividends!
This is an excerpt from the article published on Tech In Asia. You can read the full article here.

image
Business Standard
177 22

Know the best ways to pay yourself as a startup founder

Being an entrepreneur requires more discipline than expected from employees, reports Tech In Asia

“How much should I pay in to us founders?” This is a common question I get when an aspiring startup drops me a message on Facebook.

It’s understandable, to be honest. Many founders still have their day jobs while some just left theirs to start their It’s a bit of a challenge to shift from having a stable cash flow to exploring a totally uncharted path.

While I do believe the work that founders do for their businesses should be appropriately compensated for, taking as compensation might not really be the wisest thing to do. Five out of six startup founders that I spoke with over the past year paid out salaries that were more than what was justifiable for founders.

Founders’ salary
 
In a while, I’ll be discussing the income tax consideration as applicable in the Philippines (which is applicable as well in most parts of the world), but for now, let’s talk about your first.

Know the ways to pay yourself as a startup founder
In a sole proprietorship, you establish the business as if it is your extension. In this case, you don’t pay your own Similarly, the income (usually measured in terms of cash) of the business is then treated as your own disposable income (in a way, salary).

The concept doesn’t really change when you go for incorporation, where you still own the business except that you share it with somebody else. But determining your fair share will be a challenge. Ultimately, the net income of the corporation (again, for most startups, this is ideally equal to cash, except for some adjustments to receivables and payables) should be split between the founders—yes, through dividends!
This is an excerpt from the article published on Tech In Asia. You can read the full article here.

image
Business Standard
177 22