What is meant by “Total Annual Owner’s Salary”?

What is meant by “Total Annual Owner’s Salary” (sometimes called “Owner’s Compensation”)?

By “Total Annual Owner’s Salary”, we mean any monies you (the owner) receive, that are recorded on the Profit and Loss Statement.

For example,

  • If you receive a salary on the P&L, that would count.
  • If a portion of your salary is listed above the line (in COGS), that would count, also.
  • If your have “Owner’s Salary Equivalent” listed on the P&L (might be in Payroll or Other Expense), that counts, too.

However, any draws that you take out of the company that are listed on the Balance Sheet do not count as “Total Annual Owner’s Salary” for the Company Focus Form. When doing our computations, these monies are already taken into account as part of the “Net Profit”.

See this paper in the Financial Section of the Resource Library on Best Practices for recording your Owner’s Draw on your Profit & Loss Statement.

in Company Focus Information