A restaurant owner salary is dependent on a few factors, but most importantly, restaurant owners must understand the importance of receiving a paycheck. Let’s explore some of the reasons here. Click the video below or keep scrolling to read more about restaurant owner salary for independent operators.
First let’s talk through some of the things I hear when asked this question.
I don't get paid unless there's money left over at the end of the month.
I know that has to feel awful to only take home a paycheck if all cylinders fired throughout the month and there is some extra left for you. You work your ass off. You pay all of your bills. You pay all your vendors, your employees get paid, and sometimes you're left holding the bag. You don't get paid. Or worse, you run lines of credit so you can make payroll.
I feel undervalued because I work harder than anyone else in the restaurant – and I own it – and they all get paid more than I do.
As an independent operator, as an entrepreneur, you’re not putting in time for money. You’re in a risk/reward situation. So there are times where, hey, being an entrepreneur is the best thing in the world and you rake it in, you just rain money around you. And then there's times like today with COVID-19 and all these business restrictions that are crushing you, dropping your sales, increasing your costs. And now you live a life where you're paying people, trying to keep them employed because you’re generous and care. You want them to be there. You want them to be around when things change. You want your customers to be taken care of. And you do all this hard work and everybody else is getting paid, but you're not getting paid anything. Heck! You're feeding the business.
My CPA says I have to start adding myself as a paid manager.
If your CPA is looking at your financials and sees tax implications, they’re going to suggest shifting some money. The benefit of being on payroll was made very clear with the PPP loan program earlier in 2020. If you weren’t on payroll, at first you didn’t get to claim a part of the PPP money for yourself. No matter how many hours you put in, no matter how hard you worked, your work wasn’t worth protecting. Fortunately, Congress did fix that!
Here's the reality of all of these thoughts and restaurant owner salary:
When i t comes to figuring out how much your restaurant owner salary should be, the best way to figure it out is to talk with your CPA. Figure out the reasonable salary for a manager or somebody that does your job. What is that salary range for what you're doing in your restaurant? It should be market specific. The IRS wants to make sure that you're paying yourself what you would pay someone else. It's not too high. It's not too low. With your CPA, review your specific tax situation and consider their advice because they understand what will work best for your particular tax situation and whether you should just take a draw versus a salary and a draw and what that level looks like.
No matter which route you go with determining your salary, make sure you’re rewarding your work and time, and giving yourself the ability to take care of your personal obligations. Otherwise, what is it all for, right?
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
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