As a small business owner, it can be easy to forget to pay yourself for all the hard work you do. After all, there are plenty of other business expenses that seem more pressing. However, it’s important to remember that you deserve compensation for your efforts just like any other employee. The sooner you prioritize paying yourself, the easier it will be in the long run as your company grows. Here are a few tips on how to pay yourself as a small business owner:

Make Sure You Have A Clear Understanding of Your Businesses Finances

This includes knowing how much revenue you’re generating, what your business expenses are, and how much profit you’re making. This will help you determine how much you can realistically afford to pay yourself along with the type of business you have.

Once you identify the type of company that you are, you can move on to the next step. Types of companies can include:

  • Sole Proprietorship
  • Partnership
  • Limited Liability Company (LLC)
  • S corporation
  • C corporation

Which Payment Method is Right for You?

There are a few different ways to pay yourself as a business owner, and the one you choose will largely depend on the type of company you have.

Two of the most common payment methods are:

Owners Draw

This is when you take money out of your business account for yourself. This method is typically used by sole proprietors and partnerships since they don’t have to go through the same process as corporations.

Don’t forget! With this type of payment method, taxes aren’t automatically taken out, so be prepared to pay taxes on this money at the end of the year


This is when you pay yourself a regular salary, similar to what you would as an employee. This method is usually used by corporations since they have a more complex business structure. This type of payment method is best suited for C corps and S corps.

Select a Payment Amount

The key to paying yourself as a business owner is by paying yourself an amount that ties into the labor you are doing.

With a clear net profit in mind, deduct your payment from that amount. Only deduct that amount after other expenses have been taken care of such as rent, employee payroll, and whatever else is added to your monthly payments. This will help ensure that you’re not taking too much money out of the business.

An easy way to gauge your monthly income is by matching it to the same role at a different company. If you were to work for someone else, how much would they pay you per hour? This will give you a starting point for negotiating your salary with yourself.

Remember, as a business owner your time is valuable! If you wouldn’t underpay someone else for their time, don’t do it to yourself.

Pay Yourself on a Regular Schedule

Once you’ve determined how much you’re going to pay yourself and the payment method you’re going to use, it’s important to set up a regular schedule.

This will help ensure that you’re paying yourself consistently and holding yourself accountable. Otherwise, it can be easy to forget or put off making a payment to yourself, which can quickly cause issues in the future.

Typically, payroll schedules are biweekly, twice a month, or weekly.

In the United States, each state has a separate calendar that business owners must follow when paying their employees. Make sure to check the payroll schedule for your state to ensure you’re following the correct guidelines.

Treat Yourself As A Valuable Employee

As a business owner, it’s important to remember that you are a valuable asset. You are in charge of running the business and need to be compensated as such. If you have any questions about running a business as a small business owner, we’d love to help you out! Contact us here!