Why should a business owner be sure not to count his/her own salary in the profits

S

Satochua

New member
of a business?
profit is not included in the amount of money a business owner pays himself/herself.Many new entrepeneurs forgetto count the costs of their timeand take out the salary. Or when times are tough the salry is the first thing they forget.

***** This is the book explaination, BUT I don't get the explaination. So can anyone tell me the meaning of this pharagraph and find the answer within this pharagraph.
I'm sorry for the mistakes - above. I just don't have time right now.
 
Because the business owner's salary is what he/she is going to use to pay bills, buy food, put in the bank, etc. That is not part of the business profits. It isn't going to be in the business bank account, it is going to be in their personal bank account.

Say you own a lemonade stand. You are paying yourself a salary of $5 a day. At the end of the day, you've made $95. Your profits will be $90, because that $5 is now yours, not the company's. It is like paying an employee, only that employee is yourself.

Hope that made sense.
 
Back
Top