Quoting Landscape Management Magazine: "What's your salary? Based on their work with over 50 companies across the country, the consulting firm of KehoeGuido found that owner-managers in high profit companies under $3 million in annual sales are earning combined salary (pay for managing their companies) and dividends (pay for return on ownership investment) at a rate of 8% of sales. In other words, in a high profit $2 million contracting business, the owner-manager grosses $160,000 per year, of which $100,000 is salary and $60,000 is dividends." If you follow the average, than you'll need a company that grosses $625,000 to pull $50,000 a year salary.
If I grossed $625,000 in a year and was able to only keep $50,000 something would be drastically wrong. Does that mean If I made 100,000 I could only keep about $6,000? I am confused as to how these numbers add up.
I am somewhat confused too. I think for most companies in that range their debt is unbelievable, whereas a company like mine was built with little debt and after a few years of braking our backs we feel a nice profit.
