How often are you drawing money out of your business?
Drawing from your business can lead you into a trap, especially if you treat your business as an ATM to spend for personal use or your company.
Here is how you can avoid falling into that trap and still be able to draw money from your business effectively:
1) Work out a regular amount.
Work out how much you need on a weekly basis. Take that set amount each week or each month – whatever that is most appropriate for you.
2) Put money aside for tax.
Work out the tax that you need to pay and put that aside before you draw out for yourself. You won’t have to deal with unnecessary stress when that tax bill comes around if you do so.
3) Identify the root cause.
If you find yourself constantly dipping into the business, find out what could be the potential reasons. Are your personal expenses too high? Is there something that is out of your control that is happening outside of the business?
4) Work out the right amount.
In Biznostics, we provide our customers the necessary tools and applications, including a simple algorithmic calculator that will work out a sustainable amount that they can withdraw from the business. This is useful in telling them how much you need to leave in the business for it to grow while working out the amount of money you can draw out to make your personal expenses.
So, we’d love to know your thoughts about your experiences with drawings. It can be a trap for many business owners out there. Please share them in the comments below.
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