Paying yourself a salary is more than just a formality for food truck owners. A regular paycheck will help with cash flow, and retirement planning. Do you pay yourself an actual paycheck, or just draw from your food truck profits as needed? Either option is acceptable as a food truck vendor, but after reading this article, you may want to consider setting up the process of giving yourself a regular salary.
The Importance Of Vendors Giving Themselves A Paycheck
Every vendors should get in the habit paying themselves, even if it’s a small amount. It matters for a lot of reasons, not the least of which is planning your business cash flow.
Most of us have bills to pay, and if you’re relying on your food truck for income, you should have an idea of the minimum amount you need to meet your personal obligations. When you take that into consideration and add your own salary to your mobile food business expenses, cash flow is much easier to track.
Paying yourself an actual salary can also make it easier to save for retirement and collect Social Security. While there are exceptions, in most cases the IRS requires that you pay yourself an actual W2 wage in order to put money in a 401k plan. If you are considering this, we recommend talking to an accountant to decide what works best for you.
Last but not least, a salary helps quantify the value of your contribution to your food truck business. It also represents your own market value. This could become important if you want to change the business partnership, sell the business, or even get a divorce.
Essentially, if your labor isn’t calculated into the operating costs of the business, it’s hard for anyone outside it to get a firm grasp on your food truck business’s value. Do some research in your area to get a good sense of what you’re worth. How much would another company pay you for what you do? Even if you can’t afford to pay yourself that much, it at least gives you a place to start.
The Bottom Line
Paying yourself a salary is more than just a formality. Not only does it help your personal finances but it helps keep your food truck business stay healthy and operate smoothly.