Pay Your Salary in the Start Up Period
It is all too easy to get carried away in the start up days of launching your own restaurant and paying yourself an enormous salary. Many would be restaurateurs let their egos get the better of them and see their restaurant as some sort of playboy playground – letting their friends hang out and drink cheap drinks, or even free! Don’t tell your bank manager), while devising a menu of all their favourite things.
The Customer Is Always RightIt is important to remember that your restaurant is not really about you – it is about the customer and what they want, of course, but it is also about making money. Unless you are independent wealthy and do not have to turn a profit, let alone keep your bank manager happy, in which case you can give your friends Dom Perignon and serve only macaroni cheese for all it matters.
Paying yourself is one of the sticking points for a number of start up restaurants, especially if you are not starting the business alone. Rather than think of paying yourself a salary, it is better to make sure that you have enough money saved up to at least cover your essential outgoings (mortgage, bills, school fees or whatever) without having to take a penny from the pot.
Are You Passionate Enough to Go Without?Most people who are passionate about wanting to launch and run their own restaurant are prepared to go without some of life’s luxuries for a while to be able to fulfil their dream. What hardship is not buying expensive new clothes, or having a fancy holiday, in the early days of living your dream? If you are not prepared to go without, you may have to ask yourself if you have the drive and ambition required for this project.
Self Employed or Limited Company – Ask Your Accountant for AdviceAs your restaurant launches, you will need to make sure that you are registered for all the correct taxes – speak to your accountant to guarantee that you are paying what you need to pay and claiming for what you are entitled to. They will also be able to tell you if you are better suited to being self employed, and paying self employed tax, if you should be a limited company or something else, depending on your circumstances.
If you decide to be self employed, you must make sure that you are correctly registered with your local tax office within three months of starting your business, or you may be liable for a fine. It is a good idea to do this as early as possible anyway, because your local tax office is a great source of information and they send you a great pack full with tips on self employment. All it takes is one phone call – find the number on the government department of work and pensions website, or ask at your local Business Link office.
Launching your own business is a very exciting, perhaps rather daunting, time. Make the most of the available information and the expertise of your accountant to sleep a little easier at night – although after you have done another twelve hour shift you could probably sleep standing up!