Before Owner’s Salary means…
This is a term to indicate that the financial result is prior to including owner’s salary. This is a key consideration when evaluating a business to purchase to understand whether the net profit figure includes the owner’s salary. A further consideration then is whether the owner’s salary is reasonable – could you employ an external person to do the work to be undertaken by the owner, for the same salary.
WHAT’S IT MEAN? Quickies
This post is part of the “What’s it Mean?” series of short and sweet responses.
Be sure to check the other posts in the series for more quick definitions. You can follow the series along on the blog or read them first by subscribing to our popular Business Plus+ newsletter.
Article by Christie Lewis
Christie is Practice Manager at Alan Lewis Accountants . Besides accounting, her passion is for all things small business (and blogging, of course). You can contact Christie directly at christie@lewistaxation.com.au.
Christie has written 799 awesome articles for us at Alan Lewis Accountants – BLOG
Twitter: @christielewis
