Author Topic: How do you calculate savings rate when you run a business?  (Read 372 times)

RunningWithScissors

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How do you calculate savings rate when you run a business?
« on: July 20, 2017, 02:18:27 PM »
It's a simple question but I don't recall seeing it explained...how do you calculate your savings rate when you run a business?  For example, you might have sales revenue of $200K/yr but only pay yourself a salary of $50K.  The remainder, after business expenses of course, is retained by the business as investments.

Do you calculate a 'personal savings rate' based on the $50K personal income (which might make you seem like a spendypants) or based on the $200K 'corporate savings rate' as money is actually being socked away into investments or savings.

To keep us disciplined, my husband and use the former, but to be accurate I suspect we should/could use the latter.  The Canadian government is on the verge of issuing changes to the tax law which may negatively impact owners of corporations, so I'd rather play it safe and keep our noses to the grindstone.

ketchup

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Re: How do you calculate savings rate when you run a business?
« Reply #1 on: July 20, 2017, 02:22:44 PM »
Definitely the first.  And only include your personal spending.  Your business income/expenses should be entirely unrelated to figuring out your personal savings rate.  Take only your personal expenses and divide that by your personal income (taken from the business).