By Nino Fernandez.
There are internal management, coexistence with partners and even tax reasons that determine the convenience of formally establishing the owners' remuneration scheme.
What do I do with my remuneration? Do I collect a salary or withdraw dividends? It is one of the difficult questions that any businessman asks himself when his business is already on track. A company does not always reach that stage, of course. And, in the meantime, the answer is usually simpler: money is withdrawn as cash allows.
But even when the owner is a single person, the company can benefit if he formally establishes what his remuneration will be. If there are two or more partners, the topic becomes essential.
“Many small business owners fall into the temptation of not setting a remuneration, especially when it comes to firms with a single owner, or when the company has a short lifespan,” says Sandra Felsenstein, owner of the consulting firm Dinka. "But it is important that the businessman understands that he must establish his remuneration not only to value the time and capital invested, but also to not bias or alter the results of the company."
In fact, salary and dividends are not antagonistic concepts, but complementary. "It is important for the businessman to learn, from the outset, to distinguish between being an owner and managing. Many times the owner also manages, but it is important to keep the roles formally separated, because that defines the money flows: the person who works receives a salary for his work and the partner receives dividends if the company generates profits and if he decides not to reinvest them," says Santiago Antognolli, owner of the Family Business consulting firm.
"Not determining your own economic remuneration means not recognizing the high value of the entrepreneur's work in the venture. It is a serious mistake to think that the salaries of collaborators or the company's expenses are more "valuable" than their own time," says Felsenstein.
