It’s no secret that understanding how finances work can help you make more money— one of the keys to making more money as a self-employed business owner banks on this comprehension.
Working in massage therapy, knowing the differences in financial terms can help you stay in the black and increase the amounts you can put away. That’s why this week, we’re going to explain the differences between:
● Salary or Wage
● And Profit.
Helping Yourself Helps Others
Many wellness practitioners set out on their paths to do good work in the world. We help others to heal and to feel more empowered. So when we get into business, the motivation behind our job is typically selfless in nature.
Often, it’s not until we start to get into financial trouble that we try to fulfill our own financial needs…
But it’s absolutely essential that you learn about business finance in advance! Make sure your own business is viable from the outset. And turn your practice into a money-making machine that can provide for you and your family!
So how can learning about business finance help you make more money?
Make More Money by Knowing These Differences
One of the key ingredients in successfully running your business is understanding the difference between revenue, income, salary/wage, and profit. Many wellness practitioners blend these concepts together and do not understand that each of these is distinct.
Often, business owners will fail to separate their business revenue from their salary as an employee. Too many forget to pay themselves as they would if they were a staff member of their own business.
Many practitioners have no idea what, if any, profit they are retaining from their business. And they have no clue that they need to add a profit margin to their pricing.
That’s why understanding the following differences between these terms is crucial if you want to make more money in massage therapy.
Revenue is the total money that the business takes in before expenses or taxes, sometimes called the “gross sales.” It is not the same thing as income because it merely reflects your business’s sales. You might hear revenue referred to as the “top line” of your business.
Your business’s revenue does not reflect its “bottom line” (aka, your income).
The word income can apply to your business or even an individual person.
In a business sense, it refers to net sales, earnings, or profit. Income is what is left over after all expenses are paid.
The money you personally make from your business can also be called “income.” It is a general word used to describe the money you make from business to afford your lifestyle.
3. Salary and Wage:
Your salary is the total amount that a company agrees to pay you for the year.
Wages are similar, but they are usually determined by the hour.
Both your salary and wages should be budgeted and paid for as if it’s a regular expense of the company. Moreover, this should be done for any employees that you might hire.
Even if you are a self-employed business owner, you are a staff member of your own business. So you must take care of yourself as you would an employee so that you can continue to run things smoothly!
Profit is what is left over from your revenues after expenses (including your salary and taxes) are deducted from the initial “earnings.”
Many wellness professionals worry first about paying rent and expenses first. The idea of having a regular salary or profit is often an afterthought to them because they are so fixated on putting out fires. But there are ways to make sure that this and more are easily taken care of!
Understanding Finances and Legalities
In our new online course Building Your Business Backbone: Finances, Taxes, & Legalities, separating your salary from your revenue is just one of the many crucial things that we illuminate in detail.
We also cover how to build a profit margin into your pricing so that you are always taking care of your needs and making a profit as a business owner.
If you’re ready to make sure that your business has all its bases covered, you won’t want to miss this course. Plus, it provides 4 CEUs so that you can fulfill your requirements as a massage therapist while simultaneously learning invaluable business skills!