One of the first things I did when I started my first business in the early 90’s was get a business bank account. For many entrepreneurs, the line between business money and personal money can feel blurry — or downright nonexistent. You work hard, bring in revenue, and at the end of the month, it’s tempting to “pay yourself whatever’s left.”

But here’s the truth: not paying yourself properly is a recipe for burnout and bad financial habits. It also makes your business unstable. You deserve to be paid — and your business deserves structure.

So how do you balance taking a fair salary without starving your company’s growth? Let’s break it down.

Related – How to Create a Small Business Budget

Separate Your Business and Personal Finances

It sounds simple, but many entrepreneurs skip this step. Open a separate business bank account and get into the habit of paying yourself from the business like an employee. Not only does this help with taxes and accounting, but it also builds a healthier money mindset: you’re running a business, not freelancing from your personal Venmo.

Related – You Can’t Save the World by Selling Cheap. Profit Is a Must.

Choose a Pay Structure That Matches Your Business Type

There are two main ways to pay yourself:

Owner’s Draw: Common for sole proprietors and single-member LLCs. You withdraw money as needed, based on profits.
Salary: Common for S-Corps or C-Corps. You pay yourself a regular paycheck, subject to payroll taxes.

For many solopreneurs or newer business owners, starting with an owner’s draw is fine — just make it consistent so you can budget personally and plan ahead.

Tip: Talk to an accountant to understand which structure makes the most tax sense for your business.

Know Your Numbers (Especially Profit)

You can’t pay yourself reliably if you don’t know:

• What your business actually earns (revenue)
• What it costs to operate (expenses)
• What’s left after (profit)

Aim to pay yourself from profit, not gross revenue.

A good rule of thumb? Start by paying yourself 30 to 50% of your business profits and adjust based on goals, savings, and seasonality.

Try the “Profit First” Method (Optional, but Powerful)

The Profit First method, developed by Mike Michalowicz, flips traditional accounting on its head:

Revenue minus Profit equals Expenses.

You allocate your income into separate accounts: Profit, Owner’s Pay, Taxes, and Expenses. It creates structure and forces you to live on what’s left after you pay yourself and set aside taxes.

It’s a game-changer for entrepreneurs who struggle with “I’ll pay myself later.”

Don’t Be Afraid to Adjust

You’re not locked into a single number forever. Some months will be lean, others will be flush. Just don’t fall into the habit of ignoring your pay in favor of always reinvesting in the business.

Here’s a good practice: re-evaluate your pay every quarter. Base changes on actual profit, upcoming business needs, and your personal financial goals.

A Quick Example

Let’s say your business brings in $10,000 per month and your monthly expenses (software, contractor help, etc.) total $4,000. That leaves $6,000 in profit.

A simple allocation might look like this:

• Owner’s Pay: $3,000
• Taxes: $1,500
• Profit Savings: $500
• Reinvested Back into Business: $1,000

This system gives you predictability and sustainability.

Final Thoughts

Paying yourself isn’t greedy. It’s smart.

You’re the engine that keeps your business running — and if you burn out or fall into personal financial stress, it will reflect in how you lead and grow your company.

Start small, stay consistent, and build a business that works for you, not just because of you.