Why you should pay yourself a salary despite being the owner of your business.

    October 16, 2014   No comments

Are you the Owner ,CEO,Director,Boss or Founder of your business?How do you get financed by it?
This is 'loans kenya' and we relate everything to credit matters. Dear CEOs, I know you don't want to appear in your company's paylist for some reason -maybe you don't want your employees to know how much you earn monthly because its so low that it will lower your dignity or it's so high that it may trigger employees to go on a strike demanding for a pay rise.All the same giving yourself a salary will give you a 'double' credit score in a way from the eyes of lenders.
Stop using all your business accrued monthly profits as your own.Let this belong to the business as a legal entity.Now you have two bank accounts, a personal salary account and a business account.Here my point is almost shared.
Your personal account will gather it's own indepedent credit score from that of your business account. A positive credit score will constitute other factors but more importantly your saving habits.At this point, your monthly salary will then help you save in your personal account while the business's monthly gross profit will be saved in your business account.
I know most CEOs live expensive lives.What will happen if your name gets listed as a defaulter by the Credit Beareau of Kenya after failure to repay a loan you used to finance a family trip during the new year festivals? This is where your business account can pick you up again. The point here is you can use one account to borrow  when the other is uncreditworthy.NOTE;Two accounts(personal or business ,opened under one name ) even though from different banks, will both be affected if one defaults in loan repayment.
This saving lifestyle should not mean to target only big businesses.No.Even the mitumba sellers,mama mboga or kiosks keepers should adopt this.
Biashara njema!                       
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Mwabaya Katana

Posted By Mwabaya Katana

Mwabaya Katana is a Personal Finance online writer.He is the founder of 'Loans Kenya' Blog.

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