Smart Answers

Q: I am starting a professional services firm. How do I determine how much salary to pay myself? --S.H., Cleveland

A: When calculating your salary, you'll need to consider a range of factors: the age of your business, sales and profits, the industry you are in, and where you're based. Try to get a sense of what people in similar circumstances make. Aspen Publishers Inc. ( and Western Management Group ( publish yearly compensation reports, though they're pricey--from $475 to $675. Free information is available at places like and our own Web site at

In general, it is rare for a business owner with outside investors to take home more than 50% of the profits. Two exceptions are sole proprietors and owners of S-corporations, who often take as much as 100%. Owners of startups tend to take low salaries, or none at all; after all, you're still building your business. It's a sacrifice, but one that could pay off in the long term.

By Karen E. Klein

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