How much salary do startups pay

Writing a business plan: This is how you calculate your entrepreneur's wages

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Every business plan should also state what costs are expected for the company. Here founders tend to forget about the salary and other costs that they themselves bear while they build the company. A mistake! Because either you have to set up your startup as a side trade because you still have to work for bread & rent. Or you quickly run out of financial steam. So if you want to set up a sustainable company, you should have calculated your salary and costs right from the start and set them down in the business plan.

What is what: Entrepreneur wages, salaries & profits

Sure, while you're building your business, you have to make a living from something. Apartment rent, food, insurance - you definitely have costs that you have to calculate. And even if your startup makes money from day one - you lucky one, that is hardly ever given to a company - you stand in conflict for a long time: How much money do you take away from the company, how much do you reinvest? It becomes even more difficult if you are dependent on subsidies and financing from a business angel, a bank or an investor. They understand your needs, but see their funds at risk. Here it is important to play with open cards right from the start and to plan and discuss the planned salaries and withdrawals precisely.

Differences in legal forms

Also, how to withdraw the money is not that simple. In corporations such as the GmbH, UG or AG, the managing director or board member can be a regular monthly salary receive. To this extent, the managing director is an employee. As a rule, income tax is to be withheld and paid. This is deductible as a tax-reducing business expense. The whole thing is more difficult with partnerships.

Sole proprietorships and partnerships do not receive a salary, but take the money they need from their company. This remuneration, which an entrepreneur in a partnership is entitled to for work in his own company, is called Entrepreneur wages. This must also appear in your calculation, namely as the so-called "Imputed entrepreneur's wage". It is assigned to the shareholder concerned as advance profit and assessed as a withdrawal for tax purposes.

This is how you calculate your entrepreneur's wages

Little capital investment - great potential for profit. This is what investors want to see. But be careful: If you optimize your business plan on this alone, you are setting a trap for yourself. Because if you fly out of your apartment in the first six months after founding the company, then you can no longer bring the next Google off the ground at full speed. So consider all costs that you have privately and plan realistically.

In addition to rent, living expenses and maybe a car, this also includes:

  • Additional costs such as electricity, heating and water, garbage disposal
  • Telecommunication costs
  • Maintenance payments such as the costs of kindergarten
  • Expenditures on monetary and tangible assets (e.g. securities, savings contracts or real estate)
  • Special editions for Christmas, birthdays, holidays and repairs
  • Contributions for clubs / associations
  • Insurance such as household effects, personal liability, occupational disability, etc.

The Federal Ministry for Economic Affairs and Energy has put together a very detailed description of all costs that a founder should consider for entrepreneurial wages in a PDF. To do this, click on the picture:

Founding Council:

On the other hand, some insurances are purely business expenses, for example when a commercial liability insurance is taken out. The best thing to do is to discuss with a specialist which insurances are actually necessary and under which conditions. There are some providers who specialize in founders. Also don't forget: As a self-employed person, you will probably not pay anything into the statutory pension fund. So you should make provisions privately. That too costs.

Customary in the market - What can I pay out as an entrepreneur's salary? How high can my entrepreneur salary be?

The question arises as to how much. Preferably as much as possible, right? But as explained in the previous point: With the withdrawals you are shaking the balance of your liquidity planning. Your new company will probably need every penny in order not to be over-indebted in the coming month.

If you have to explain the capital requirements to an investor, then he is sure to look closely at the planned entrepreneur's wages. Here you can show whether you are a realistic entrepreneur, a greedy shark or a dreamy idealist. Because neither too little nor too much is right here. So first of all: Research what is customary in the market. What salaries do entrepreneurs get in your industry? The website SalaryReporter offers an interesting list: It cites a Kienbaum study and according to it, a managing director earns an average of 389,000 euros. The total direct remuneration is highest for chairmen of the management with an average of 549,000 euros; Sole managing directors earn 287,000 euros and members of management boards receive 385,000 euros. But be careful: Do not take these salaries as a measure of what you want to pay out in the first month of your company. Because this is about companies that are already making a lot of money. You don't belong to that yet.

In addition to the standard market salaries and your actual needs, you should also research how other founders calculate and price their entrepreneurial salary. And you should think about the future ...

Not just today - How my entrepreneur's wages are developing

There are usually two motivations for start-ups: They want to do their own thing, be the boss, and promote their own idea. And they want to earn better than an employee. But if you look at the stories of founders (some of them can be found in our founder stories), you will see that you are facing a dry spell. In which you will work more than as an employee and probably also earn less at first.

It doesn't have to stay that way and you should calculate that too. So if at the beginning of your business start-up the entrepreneur's wage or salary is lower than the average and is based on your necessary expenses (see above): Later you can also pay yourself more. Later means when your company makes a profit. The more precisely and realistically this point is carried out in the liquidity planning, i.e. in the financial part of your business plan, the more you show your investors that you are a worthwhile investment.

Why the entrepreneur's wages / salaries have to be in the business plan - and where

As already mentioned above: If you want to make your investor or your bank credible that the financial plan in the business plan is on solid ground, you will make yourself implausible if you do not offer a solution for your own private costs. The withdrawals (in the case of partnerships) or salaries (in the case of corporations) must therefore be clearly stated.

A liquidity plan is part of every good business plan. It lists all of your company's income and expenses for the first few months. It looks a bit like an income / expense calculation that every self-employed person should and must do. Not only costs such as start-up costs, company insurance, purchase of goods etc. are to be recorded there, but also employee salaries and withdrawals.

Founding Council:

So that the liquidity of your startup is always preserved, 1 and 1 must be neatly added together. Our specialist article “Basics: The Founder's 1 × 1 of Liquidity Planning” provides instructions.

The start-up grant can help you to apply for it, read in these articles: “Applying for a start-up grant correctly: In 10 steps to funding” and “Start-up grant 2020: entitlement, amount, requirements and the right application to the employment agency”.
And here are instructions for the business plan “In 7 steps to a business plan” as well as an overview of tools for creating the business plan “Top 6 business plan tools for creating your personal business plan”.