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***How Much to pay myself?***

directrpepdirectrpep subscriber Posts: 2
edited January 2008 in Business Planning
Hi everyone,
Started a Corporation C company (Delaware).  I am the Founder/CEO. 
I was wondering, what should my salary be while we initially start up? I am getting some seed funding. Angel`s and others. 
Everything up to this point I have been paying out of pocket.  I would like to get a salary so at the very least I can pay bills, etc. I just want to know what is the OK amount for a founder/ceo to make during this stage. Obviously I want the best for the company therefore am going to take as little possible so the money can go into other areas for the company to grow and succeed, but i was just wondering if there was a set norm for this.
thanks.
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Comments

  • robertjrobertj subscriber Posts: 0 Member
    You`ve pretty well said it in your last paragraph. If you are going to spend full time on the business, you will need a "stay alive" income. The amount would be in your business plan financials - so your investors should have seen it as part of the disclosure. 
     
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  • crazydiamondcrazydiamond subscriber Posts: 1
    Once again, Robert is right on the money. The key point is that you have a VC involved. Please tell us that there was provision for this in the business plan! Can`t imagine it getting past them without it...There is no such guideline on what a founder should get paid - it all depends on the business, and what role they are taking in the active company. As to the question of not taking much so that the company can succeed - frankly, if it cannot pay you a salary of some kind, proportionate to what its fair market value is, then there is a problem. Have you considered charging the firm with your salary, but having a check-off for reinvestment in shares? What I mean is, suppose your fair market value is $120 k p.a., but the cashflow is such that really only 440k is drawable for the next 18 mos. Divert the difference back into the company by earning in shares, instead of taking it in cash. That way, cashflow is conserved, but your value recognized by the other participants. The time to do that is BEFORE, the VC signs off, in most circumstances.To be clear - once there is another partner involved - a VC or an individual -the value of your efforts must be properly recognized, Anything else will lead to a very uncomfortable relationship. Mike
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  • infiniqueinfinique subscriber Posts: 0 Member
    I think 2000 USD is reasonable until the company go fulls swing.
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