Should I pay myself a dividend or a salary?
In cases like this you should be aware that tax treaties may exist and that countries are generally willing to enter into them. Their purpose is to help prevent double taxation. Tax treaties often times give you a better tax rate than even being a resident of the countries in question! (For instance, the Italy to US tax rate is lower than simply doing business in many United States)  This should guide your google search, here is something I found for Germany/Spain http://tmagazine.ey.com/wp-content/uploads/2011/03/2011G_CM2300_Spain-Germany-sign-new-tax-treaty.pdf It appears that the dividend tax rate under that treaty is 5% , to my understanding, the income tax rates are often multiples higher! I read that spain's income tax rate is 18%  So what I would do is see if there is the possibility of deferring taxes in the lower tax jurisidiction and then doing a large one time dividend when conveninet. But Germany isn't really known for its low taxes, being a Federal Republic, the taxes are levied by both the states and the federal government. Look to see if your business structure can avoid being taxed as the entity level: ie. your business' earnings are always distributed to the owners - which are not germany citizens or residents - as dividends. So this way you avoid Germany's 15% federal corporate tax, and you avoid Spain's 18% income tax, and instead get Spanish dividends at 5% tax. Anyway, contact a tax attorney to help interpret the use of the regulations, but this is the frame of mind you should be thinking in. Because it looks like spain is willing to do a tax credit if you pay taxes in germany, several options here to lower your tax footprint.
This is exactly how I feel. I've been doing contract design for the last 5 years. I've made an OK salary, not quite as much as I could in the corporate world. But I don't have any one to answer to but myself, which means more to me than the extra money I could be making. "The first rule I follow is pretty simple: Get paid for what you do. Earn a return on what you own. If you are running your company prudently, you should earn a salary for the position and responsibilities you hold within the business. This salary should be competitive. You should be able to replace yourself in the business at this salary. If your title is ""President"" or ""CEO"" - look for market rate salaries for others in that position within your industry and company size. If you wear multiple hats in a small business, you will likely have to blend this salary based on those various positions.  Based on how you run your business, the money left over at the end of the year after you and your team takes a competitive wage is your profit. If there isn't any profit, then you might want to do some work on your business model. But if their is a profit, then it's a clear return on what you own and not just a payment for work completed. The idea would be that you could exit the business as an operator, pay someone else to do exactly what you do, and you would continue to get that profit return at the end of the year. This is when a business acts like a true asset.  Whether you take your money in salary or profit distributions (or dividends) depending on your structure, taxes are about the same. W2'd salaries get normal employee contributed taxes, but then of course the company matches these. It is identical if you take a guaranteed payment or distribution that gets hit with self employment taxes. Profits are also going to get hit with the same taxes.  Follow ups: 1) A fair salary would be a competitive market wage for the position you hold within the business. What is left over would be considered true profits and not just fabricated profits by taking a lower than market wage to boost the appearance of profitability. 2) Shareholders requesting salary information would be covered in your Operating Agreement or Shareholder Agreement. This might be terms you set with your investors. Or you might simply set a term that you only need approval if a single salary exceeds a cap (like $250,000). Which would mean you would need to present why you deserve a higher salary and have your board approve (if you are governed by said board via your investors). Profitability is a different ballpark. Your investors most likely have a right to see a monthly, quarterly, and/or annual Profit & Loss statement which should clearly state profitability. I can't imagine running a completely closed book company to my investors. Actually... I can't really imagine ever investing in a company where I am not permitted to see the financials.  Something to also consider here is the threat of trying to keep your profit numbers low in order to not pay taxes or to pay yourself a higher salary. If you ever plan to sell or exit the company, most widely accepted valuations of a business are done from profits (or EBIDTA). You might think you are saving yourself a couple points on taxes by avoiding profits in the short term, but if you exit the business and get a 3-5X (or even up to 12X in some cases) multiplier on your annual profits, you might be kicking yourself for trying to hide them through your accounting practices. Buyers will often sniff out an owner who created false profits by not paying themselves, but what's harder to do is figure out how much profits should have been when there were none on the books. By saving yourself $100,000 in taxes this year, could add up to close to $1,000,000 in an acquisition.  Good luck." To point #1: We are moving but I don't know If I can afford the rent as the family grows I would start by looking at your debt-to-income ratio. In the US, most banks look at this for mortgage purposes, but it also gives you a general idea of what monthly mortgage payments will be comfortable given your particular financial situation. Think of it this way, if a bank is unwilling to lend you money because of a high debt-to-income level, this indicates that you have very little leeway with regard to your budget. So a lower number indicates that you will have more flexibility and comfort with meeting your rent/mortgage obligations when unforeseen bills pop up. The article below indicates having < 43% DTI is ideal (in the US). Here's a link to a debt to income calculator and some extra info (I suggest finding one aimed at the UK market): WellsFargo debt to income calculator Why is the 43% debt to income ratio important? Point #2: How can a person measure how much to spend on food, car, bills or rent from his salary? Is there a formula to keep in check? Other answers have addressed how to make a budget, so I will not repeat that. However, here's another angle with regards to spending/saving. This article recommends 50/30/20: According to the popular 50/30/20 rule, you should reserve 50 percent of your budget for essentials like rent and food, 30 percent for discretionary spending, and at least 20 percent for savings. Read more at: https://www.moneyunder30.com/how-much-should-you-save-every-month-2 In the real world, these goals may not be realistic, and different people have different ideas about how aggressive to be with regards to savings. However, you can get a general idea and adapt for your particular needs. Point 3: I find myself looking at my account every single day and get tensed and sad because almost whenever the money (pay) comes in I freak out that after everything there is nothing for us to enjoy or save. "@duffbeer and @JoeTaxpayer give great answers, and you should probably accept one or the other, but I would like to recommend trying some of the online tools for Monte Carlo analysis.    A Monte Carlo analysis is essentially plugging in a range of possible values (a probability function) for yearly values of pretty much anything involved in your financial life: salary growth, investment rate of return, expected life span, etc, etc, etc....and then running thousands of simulations on those values to give you the probability that your money will last until you die.  It is basically a really souped up version of a ""what-if"" spreadsheet.   A google search for ""monte carlo retirement planning"" may sound like a hilariously bad idea, but it lists some free tools that you might find interesting or useful. I myself have only used the product from Financial Engines quite a bit, but I believe that is only available through your employer. (If they offer it.)" You also need to remember that stock options usually become valueless if not exercised while an employee of the company.  So if there is any chance that you will leave the company before an IPO, the effective value of the stock options is zero.  That is the safest and least risky valuation of the stock options.   With a Google or Facebook, stock options can be exercised and immediately sold, as they are publicly traded.  In fact, they may give stock grants where you sell part of the grant to pay tax withholding.  You can then sell the remainder of the grant for money at any time, even after you leave the company.  You only need the option/grant to vest to take advantage of it.  Valuing these at face value (current stock price) makes sense.  That's at least a reasonable guess of future value.   If you are absolutely sure that you will stay with the company until the IPO, then valuing the stock based on earnings can make sense.  A ten million dollar profit can justify a hundred million dollar IPO market capitalization easily.  Divide that by the number of shares outstanding and multiply by how many you get.  If anything, that gives you a conservative estimate.   I would still favor the big company offers though.  As I said, they are immediately tradeable while this offer is effectively contingent on the IPO.  If you leave before then, you get nothing.  If they delay the IPO, you're stuck.  You can't leave the company until then without sacrificing that portion of your compensation.  That seems a big commitment to make. Not sure of your locality. In the USA, there are many options. There are many corporate bonds that pay interest monthly. You can invest in a handful of bonds, chosen so at least one of them pays interest each month. (Minimum investment requirements make this an expensive option)  Unit Trusts made of bonds (a handful of bonds wrapped into a single fixed investment) usually pay monthly interest. As the bonds begin to mature, the interest payments shrink (but you begin to get principal payments which can be reinvested). Bond mutual funds and ETFs usually provide monthly dividends (that come from the interest and capital gains of the bonds held by the fund). Dividends are usually consistent, but not necessarily fixed.  You can produce a monthly income from stocks in the same way as the above mentioned bond methods. Income can be consistent, but not fixed. You need to report the income from any work as income, regardless of if you invest it, spend it, or put it in your mattress (ignoring tax advantaged accounts like 401ks).  You then also need to report any realized gains or losses from non-tax advantaged accounts, as well as any dividends received.  Gains and losses are realized when you actually sell, and is the difference between the price you bought for, and the price you sold for.  Gains are taxed at the capital gains rate, either short-term or long-term depending on how long you owned the stock.   The tax system is complex, and these are just the general rules.  There are lots of complications and special situations, some things are different depending on how much you make, etc.  The IRS has all of the forms and rules online.  You might also consider having a professional do you taxes the first time, just to ensure that they are done correctly.  You can then use that as an example in future years. However,  you have to remember that not all dividends are paid quarterly.  For example one stock I recently purchased has a price of $8.03 and the Div/yield = 0.08/11.9 . $.08 * 4 = $0.32 which is only 3.9%  (But this stock pays monthly dividends). $.08 * 12 = $0.96 which is 11.9 %.   So over the course of a year assuming the stock price and the dividends didn't change you would make 11.9%