How Much Can I Pay Myself As A Business Owner?

Let’s talk about something that hits close to home: paying ourselves. Running a small business is exciting and rewarding, but figuring out how much to pay yourself can feel surprisingly tricky.

Many female entrepreneurs struggle with this decision. You want to make sure your personal finances feel stable and secure, but you also want to reinvest in your business so it can continue to grow. Finding the right balance between those two priorities isn’t always easy.

The good news is, you don’t have to guess. There are practical, thoughtful ways to decide what a healthy paycheck looks like for you and your business.

In this post, we’ll walk through the key factors to consider when determining your salary and how to create a plan that supports both your life and your long-term business goals.

How Much Can I Pay Myself as a Business Owner?

Understanding Business Finances:

Before deciding how much to pay yourself, you need a basic picture of your business finances. That means regularly looking at your profit and loss, cash flow, and overall financial health. You don’t need to be an expert. You just need enough clarity to know what your business can realistically support.

Consideration #1: Business Viability and Stability:

Think about where your business is right now. If profits are still inconsistent, it may be smarter to reinvest earnings for a while. If your business is stable and bringing in steady income, you’ll have more flexibility to pay yourself regularly.

Consideration #2: Industry Standards and Market Trends:

It helps to know what other business owners in your industry are paying themselves. Researching industry standards and talking with fellow entrepreneurs can give you helpful benchmarks. Use that information as a guide, not a rulebook.

Consideration #3: Personal Financial Needs:

Your salary should support your real life. Consider your living expenses, debts, and financial goals. The goal is balance, paying yourself enough to feel secure while still leaving room for the business to operate and grow.

Consideration #4: Business Goals and Growth Plans:

Your paycheck should match the stage of your business. If you’re focused on growth, you may choose to reinvest more profits. If things are steady, you might feel comfortable increasing your personal pay. Let your goals guide the decision.

Consideration #5: Legal and Tax Implications:

Paying yourself isn’t just a personal choice; it’s also a tax and legal decision. Different business structures have different rules, so it’s smart to check in with an accountant or tax professional to make sure you’re doing it the right way.

Deciding how much to pay yourself as a small business owner isn’t about guessing. It’s about taking a thoughtful, practical approach.

Start by looking at a few key factors:

• Your business’s current financial health

• Industry standards and trends

• Your personal financial needs

• Your business goals and growth plans

• Any legal and tax considerations
  

The right salary is rarely perfect on day one. It’s something you adjust over time as your business changes and grows.

Revisit your pay regularly, make small tweaks when needed, and keep your personal goals aligned with the health of your business.

That balance is what leads to long-term confidence and stability.

Want to feel calm, cool, and collected when managing your money?

Who doesn’t?! Check out The Ultimate Accounting Checklist, your guide for managing and maintaining your business finances with ease.