
How Should You Pay Yourself as a Business Owner? (And How Often?) [Ep. 379]
If you’re paying yourself whatever is left after your software, contractors, taxes, and business investments are covered, you don’t actually have an owner pay strategy. In this episode of The Real Truth About Business podcast, I’m breaking down how to think about paying yourself as a business owner, including how much you should pay yourself, how often you should get paid, and why your payment schedule needs to reflect how money actually flows into your business. After 9 years of experience working with service-based entrepreneurs, I see too many owners generating revenue while treating their own paycheck as optional. Your business strategy should support your life, and that means intentionally planning for owner pay instead of hoping there’s money left over. We’ll talk about personal income needs, cash flow, payment cadence, owner draws, and how to make investment decisions after accounting for your paycheck. Revenue growth matters, but financial strategy is what turns that revenue into a business that actually pays you.
What You'll Learn:
- How to determine how much your business actually needs to pay you
- Why “whatever is left” is not a sustainable owner pay strategy
- How your business structure can affect the mechanics of paying yourself
- How to create a payment schedule based on when revenue enters your business
- How percentage-based owner pay and reserve accounts can create consistency
- Why investment decisions should account for your paycheck before you spend the money
Episode Highlights:
[00:00] Introduction: How much are you actually paying yourself?
[02:15] Why owner pay is part of your overall profit strategy
[05:00] Why paying yourself last needs to stop
[07:15] Owner draws, S Corps, and how business structure affects payment
[09:30] Determining how much your personal life needs from the business
[11:00] Matching your paycheck cadence to when your revenue comes in
[13:30] Using percentages and reserve accounts to pay yourself consistently
[16:00] How investments affect your paycheck and cash flow decisions
[18:15] The two numbers every business owner needs to know
[20:00] Wrap-up: Making owner pay a routine part of your business
Key Takeaways:
Stop Paying Yourself Whatever Is Left
Here’s what I hear constantly when I ask business owners how much they pay themselves:
“I don't know. Whatever is left.”
Or:
“I take a draw when I need it.”
Meanwhile, the business is paying for software, contractors, taxes, programs, marketing, and other investments. Then you look at the bank account and decide whether there’s enough remaining to pay yourself.
That is not a payment strategy.
If we’re building businesses that are supposed to support our lives, we cannot consistently treat ourselves as the last person who gets paid. Your business needs to have an intentional plan for paying you.
Start With What Your Personal Life Actually Requires
Before deciding how much to pay yourself, look at your personal expenses.
What does your business need to provide for your life?
If you need $3,000 per month to cover your personal expenses, that needs to become part of the financial plan. You shouldn't automatically drop your paycheck to $1,500 because you decided to spend another $1,500 somewhere else in the business.
Think about it another way.
If you were looking for a job tomorrow, what is the minimum salary you would accept?
Most of us would never take a job without considering whether the salary could support our lives. Yet we become business owners and suddenly stop applying that same standard to ourselves.
Your business may not be able to pay your ideal amount immediately, especially if it's newer. But you should at least know the number you're working toward.
How You Pay Yourself Depends on Your Business Structure
The mechanics of paying yourself can depend on your business structure.
For many single-member LLCs and sole proprietors, that may mean taking an owner's draw by transferring money from the business to yourself. As I explain in the episode, an owner's draw is not treated as a business expense on your profit and loss statement.
An S Corporation works differently and generally involves paying the owner reasonable compensation through payroll.
This is where I want to be very clear. I am not a CPA, tax strategist, or lawyer. Work with your own qualified tax professional to determine the appropriate structure and payment method for your specific business.
Your Pay Schedule Should Match Your Cash Flow
One of the reasons business owners struggle to pay themselves consistently is that business revenue doesn't always arrive consistently.
This is where understanding your cash flow becomes important.
Look at how your clients actually pay you.
Maybe most of your recurring payments arrive between the 15th and 25th. It may not make sense to take identical weekly paychecks when most of your revenue enters the business later in the month.
You could instead take a larger monthly payment after that revenue arrives.
If your income is project-based and comes in throughout the month, another option is deciding that a percentage of each payment goes toward owner pay.
The goal is to build a cadence around how your business actually makes money.
Create a System That Makes Paying Yourself Routine
Paying yourself shouldn't be something you remember to do after everybody else gets paid.
It should become routine.
One option I use is creating a separate reserve account specifically for owner pay. A predetermined percentage of deposits can automatically move into that account, creating a pool of money specifically designated for your paycheck.
Then you're not looking at one big bank balance and mentally treating all of that money as available to spend.
You've already identified what's yours.
Inside the Focused Visionary Framework, we talk about Pricing, Pipeline, and Sales because those are what help generate the revenue. But financial strategy answers the next question: What happens to that money after it arrives?
Make Investment Decisions After Accounting for Your Pay
Paying yourself first doesn't mean you can never invest in your business.
It means you understand what the investment is actually costing you.
If you want to invest in a new program, contractor, piece of software, or other opportunity, ask what that decision affects.
Does it reduce your paycheck this month?
Does it require debt?
Could you wait until more revenue comes in?
Would a payment plan make more sense?
Could you create a cash injection offer to generate the additional money?
There isn't one universal right answer. The important shift is making the decision from facts instead of spending the money first and discovering afterward that there isn't enough left to pay yourself.
Know Two Things: How Much and How Often
There are two key decisions I want you to make.
First, how much do you need and want to pay yourself?
Second, how and when are you going to pay yourself?
Maybe that's a percentage of every dollar that comes in. Maybe it's one lump sum each month. Maybe you create a reserve account and pay yourself on a consistent schedule.
Your exact system will depend on your revenue model and financial situation.
What matters is that you have a system.
Revenue Growth Is Only the Beginning
Business strategy can help you generate more money.
Financial strategy helps you decide what to do with it.
That's the conversation I want us having more often because generating impressive revenue doesn't mean much if the business still isn't paying the person running it.
So start with your numbers.
Determine how much you need to pay yourself. Look at when money enters your business. Decide how you're going to create a consistent owner pay cadence.
Then make your other financial decisions around that reality.
You are the CEO. Your paycheck needs to be part of the plan.
Resources Mentioned
- Get your FREE Ceo Income Plan
- Book a CEO Strategy Call
- Learn more about The Missing Piece Intensive
- Learn more about The Focused Visionary Accelerator
- Download the FREE Lead and Conversion Tracker
- Subscribe to the Sunday Morning Brew Newsletter
About the Host:
Michelle DeNio is a business strategist based in Sarasota, Florida, specializing in helping service-based entrepreneurs break through revenue plateaus using her Focused Visionary Framework. With over 300 podcast episodes and 9 years running her consulting business, she helps coaches, consultants, and service providers scale sustainably through strategic planning, pricing optimization, and sales process development.
Connect with Michelle
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