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I pay myself $33K gross annually. I'm the lowest-paid salary employee in the company.
$33K is pretty low in most places in the US, How do you manage to stay focus on runing the business?
I know for me, I absolutely must have $2000 to survive $2500-$3000 a month to be comfortable... anything over that is nice to have.
Of course most VCs are making $250-$1M in salary per year. That doesn't count their carry... that's just their base salary.
here is what VCs generally do:
1. Pre-launch/Pre-revenue, 20-something founders: $50-100k
2. 30 something with two kids in private school: $100-250k
3. Profitable company having just completed a C round of $15-30m: $200k with a $200k bonus on hitting a huge milestone.
Also, the secondary market for stock has helped this... i.e. reports are the founders of Wordpress, groupon, facebook and digg got to selling a couple of million dollars in stock.
best jason
After talking to our families, each of us came up with the minimum salary required to maintain our current lifestyle. The idea is that a founder should not be saving any money, but they also shouldn't be forced to move into a smaller home or stop eating out.
What's interesting is that this produced 3 very different salaries, even though our "market" rates are roughly equal.
Our VCs were completely supportive of those numbers and did not push back at all.
It also assumes you have enough profit to pay yourself. Thus, the 33k is prob best if you're not living on ramen and tuna (go grab a beer as one commenter suggested). Because, if you're investing back into the biz then your future salary is exponentially higher.
For example, my interactive marketing company is experiencing triple digits ROIC so we have yet to take a dollar out of the company and continue to invest not only profits buy our own outside cash (and it's been well over a year) but we're getting to the point where we need to pay some bills and feed ourselves. Thus, we're going to keep our salaries as low as possible to cover our personal expenses like rent and food. We're doing this because we know a year from now we're going to much, much more profit to work with. So you want a hard number? Less than $30k per year. Pow.
Off-topic from the OP's question, but if you're incorporating as an S (for example, although other pass-through entities are similar), you need to pay yourself a "reasonable and appropriate" amount as salary. That is, you can't just pay yourself $1/year in salary and take $500K off in K-1 distributions (thereby avoiding FICA and other payroll-only withholdings). The IRS will tag you for that in a heartbeat.
I would also like to point out that most Angel Investors/VCs won't invest in LLCs/S-Corps. I think this is because of preferred options... I'm sure someone else with actual experience could chime in.
If your expenses are $4000pcm, then take $5500/$6000. You're running a company after all, and that precious down time you have has to be maximised (generally costing money).
If you're financially happy you'll have no need to work, but you'll want to.
$400K...you are the CEO...you gotta get paid like one. In reality it's how much you can afford. If you don't need money..pay yourself $1. If you need $15K to live on...pay yourself $15K. At least until the company is profitable. Once it's significantly profitable, you can afford to pay yourself more.
CEOs that have run a successful business before might make $250k-$300k in Silicon Valley (a high salary area, to be sure).
$250k would probably be the high end for a CEO of a 30 person company, if the CEO had not had a major success before.
We didn't take any funding, so it really wasn't possible to pay ourselves before becoming profitable unless we took on other debt. We decided we'd rather be individually poor with a company than individually wealthy with no company.
Once the company was profitable, the partners agreed on a goal-oriented pay structure. The base was under market value compared to other opportunities, but was still more than enough to easily live on. Then, by hitting reasonable revenue targets, salary would increase quickly.