How Much Should You Pay Yourself From Your Business?
How Much Should You Pay Yourself From Your Business? A Practical Guide for Small Business Owners
Most entrepreneurs guess what to pay themselves. That is why their personal finances feel unstable and their business cash flow keeps breaking. Paying yourself correctly is not a luxury. It is a financial discipline that protects both you and the company.
Here is the simple truth:
Your pay should be consistent, predictable, and based on math — not emotion, hope, or leftover scraps.
The Real Reason You Struggle With Paying Yourself
If you are unsure what to pay yourself, it’s usually for one of three reasons:
Your business and personal finances are mixed together
You cannot make clear decisions when money flows in every direction.
You pay yourself randomly
One month you pull out too much. The next month you take nothing. No system means no stability.
You do not know your numbers
You cannot set a salary when you do not know your margins, revenue rhythm, or expenses.
This is fixable. Quickly.
The Simple Formula for Paying Yourself
Step 1: Know Your Real Operating Expenses
Pull your last 3 months of business expenses and calculate the average.
This tells you the baseline your business must cover before anything else.
If you use QuickBooks Online, you can automate these reports:
https://quickbooks.partnerlinks.io/g8c6ioiu5mop
Step 2: Set Aside Taxes Automatically
Move a percentage of every deposit into a tax account.
Most small businesses should hold 25 to 30 percent of net income unless advised otherwise by a CPA.
Step 3: Choose the Pay Percentage
For most small business owners, a healthy take-home target is:
Owner Pay Range: 30 percent to 50 percent of profit (not revenue)
Low margin industries lean toward 30 percent.
Service-based businesses with minimal overhead can pay closer to 50 percent.
Step 4: Pay Yourself on a Schedule
Weekly or biweekly. Never randomly.
Predictable pay creates predictable personal finances.
What If My Business Isn’t Making Enough to Pay Me?
This is the part you do not want to hear, but need to.
If your business cannot afford to pay you…
your pricing, your margins, or your operational structure is broken.
This is not a “work harder” problem.
It is a strategic redesign problem.
Fix the system. The income follows.
Owner Pay Benchmarks for Common Small Businesses
Service businesses (coaches, consultants, creatives)
Owner pay: 40–55 percent of profit
Why: low overhead, high output, high margins
Retail, e-commerce, product-based companies
Owner pay: 20–35 percent of profit
Why: inventory and cost of goods eat margins
Contractors, trades, field-service businesses
Owner pay: 25–40 percent of profit
Why: labor and equipment reduce margins but revenue can scale
These are not rules. They are anchors so you stop guessing.
The Money System That Makes Owner Pay Easy
The most stable owners use four simple accounts:
Operating account – all business expenses
Owner Pay account – weekly or biweekly transfers
Tax account – automatic percentage set aside
Profit account – reward, reserves, expansion capital
This system forces clarity.
Clarity forces discipline.
Discipline creates consistent income.
Why Paying Yourself Correctly Increases Business Stability
Paying yourself on a rhythm does three things immediately:
It stabilizes your personal life
You stop living off unpredictable business withdrawals.
It protects your business
You stop draining the business emotionally or impulsively.
It reveals the truth about your margins
The moment you set your pay, you expose whether your business can sustain it.
The numbers start telling the truth.
Lionhood Financial Coaching: Build a Business That Pays You Predictably
If you are still guessing what to pay yourself, you do not need another generic budgeting video.
You need a personalized financial architecture that aligns your pricing, margins, accounts, and revenue rhythm.
Lionhood Financial Coaching builds that system with you.
If you want your income to be consistent, your decisions to be clear, and your business to finally feel stable, apply for coaching today.
Your business should pay you well. We help you build the structure that makes it happen.