Founders · Payroll

Do you or don't you account for your own salary?

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

June 19th, 2013

(Regardless of reverse vesting and other lock-in)

Joseph Galarneau Founder and CEO at Mezzobit, creating transparency and control for Internet data

June 19th, 2013

If you're bootstrapping and paying yourself, that seems like a "left pocket/right pocket" situation. But it's perfectly reasonable for some founders to be better off financially than others, in which case some may get paid early on and some won't. But there are ways to account for that to make it fair when the round comes in.

Mohammad Forouzani CEO at Forecast.net

June 20th, 2013

I would suggest that when your bootstrapped, you wouldn't take a salary, because as Joseph said, it's like left pocket/right pocket - with one problem... the taxman gets to take a cut!

As a technical founder, I have previously deferred salary until funds have been raised. I have also agreed to take no salary at all.

John Wallace President at Apps Incorporated

June 20th, 2013

It would depend on my circumstances, but if I need to draw a salary then I'd include it in the plan. I'm looking to create a realistic and sustainable structure when I'm pitching to investors.  

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

June 19th, 2013

Thanks all.  Sorry for the ambiguity resulting from the brevity.

Not wanting to risk violating the new terms of service, I won't disclose a search for a technical cofounder.  

But I am going ahead with shopping a slide deck around -- despite being in the middle of developing our alpha product.  My financials include a nominal salary for me upon closing the round.

I was just curious about whether more people end up doing the same or more figure out a way to forego drawing salary -- thanks!

Aleksandra Czajka

June 19th, 2013

You account for your own salary among the one's available. 

Mark Piekny Engineer, Consultant & Entrepreneur

June 19th, 2013

Depends on who is asking and where you are in the funding process.  If you've bootstrap up till now, then, no.  Your salary is your sweat equity that buys you the confidence of your investor(s).

Tim Kilroy Analytics - LTV - Boosting Profits - Digital Marketing

July 11th, 2013

So, it is awesome if you can work without a salary. But, if you need one, you need to present it. Investors want you to get paid, because if you don't you may not be able to afford to put in your full effort. Obviously, account for it. When you take funding, you get it to pay for people and things - and you, as the founder, are arguably the most important thing. Nobody wants a founder who is in debt, who is wondering where the next mortgage payment is coming from. They want you focused on building the value of their investment.

Louis Hatzis

July 11th, 2013

Investors put up money in a company so it can be used and pay for resources, mostly for human resources to get the job done. I don't think this is an issue. If you're not there someone else will be and they will get paid.

The issue of founders getting paid, comes up before the company has raised any money. Some founders have a big runway and can go a while without a salary, others cannot. Regardless of who gets paid  or not, you need to decide the salary of each founder, based on their role. Keep a record of who gets paid what,  and when the company has money, it simply pays the founders that didn't take a salary what is owed to them.

Louis Hatzis

July 11th, 2013

*has not raised any money.