How To Pay Yourself as a Business Owner: Three Common Options


Owning a business is a lot of work, for which you deserve to be rightly compensated. How, though, do you go about giving yourself a paycheck as the CEO and founder of the company? There are several different ways to go about setting up a business and making sure that you get paid personally, but some are more effective and simpler than others. In this guide, we’ll take a look at three of the most common ways entrepreneurs make sure they get paid. 

Start by figuring out how much you can afford to pay yourself

There are a lot of different expenses and elements involved in business accounting. You can’t just look at the past month or two and choose a salary based on those insights. You need to take a long-term look back at your business and check out everything, including:

  • Annual or ongoing expenses
  • Occasional expenses
  • Taxes
  • Expected business fluctuations (seasonal, etc.)
  • Future expansion goals 

This will help you determine how much money your business should keep on hand so that your accounts stay afloat. Once you know that, you’ll be able to know how much to pay yourself and/or other owners of the company. 


The first option, and the most common option for experienced, seasoned business owners, is to draw a regular salary like any other employee. The dollar amount of this salary will depend on the research that you did earlier, but it will be put through standard payroll processes, which means taxes will be withheld. Personal income taxes are a lot easier with this method, and it is going to be more reliable for owners than having to take a draw when they need money. 

Direct draw

Speaking of the direct draw, that’s the other main way that business owners pay themselves. A draw is a direct withdrawal from a business account that is deposited into your personal account. It could also be a draw from petty cash where you pay yourself from the safe—in any case, it doesn’t get taxed, and you’ll have to make sure that it goes through proper taxation later. 


Finally, there is the option to use a combination of salary and direct draw, or salary and dividends, as a means to pay yourself. This will allow you to send some of it through payroll taxes and take the rest as a direct, lump-sum payment, which will have to be reported on your taxes. The best way to determine what is best for your business and your bank account is to take the time to consider these three options and which works best for you. 

Choosing the right path 

No two business owners are the same, nor do they have the same needs. Fortunately, a little bit of research can go a long way. As you can see, it’s not that difficult to pay yourself as a business owner. There are even options to fit different needs. Ultimately, the choice will be yours to make, but the type of business that you have could also influence that decision. For example:

  • In a sole proprietorship or partnership, you essentially are the business. Therefore, you pay yourself a draw and pay quarterly tax estimates, covering all the bases for your personal and business tax needs. 
  • If you have a corporation and you work within the organization, you will be paid as an employee through the payroll system. This salary will have taxes withheld, and can be for the entire amount or just a partial salary with the rest taken on draw. 
  • S corporation owners seem to do better to limit their salary and take more of the pay as a draw. However, you can’t limit it too much because the IRS requires the salary you take to be “reasonable” for someone with your experience and in your position. 

There are a lot of other factors to consider, too. The best thing that you can do is get help from a tax professional that understands business operations and knows how best to run the show, helping you get paid with simplicity and straightforward options. 

Be consistent 

As a business owner, it can be tempting to take a reduction in pay to give more money to the business, or to give yourself a little extra during the busy season because of that new client you landed. The occasional fluctuation is fine, but you really should try to be consistent in how you pay yourself, just as you would with your employees. Stick to a schedule, reevaluate that schedule every year or so, and make sure that you’re putting your personal goals in line with your business goals. 

When you take a draw, you can use an electronic funds transfer (EFT) or write yourself a check from the business account. In cash businesses, as mentioned, some people do take cash, but it’s usually not that common. Whatever method you use, stick to it so that there’s consistency in how you’re getting paid as much as there is in how much you’re getting paid. 

While you’re working out the details, who’s fielding the calls?

You’ve got your hands full running a business (and trying to figure out how best to do so). You might not have the time or resources to handle things like 24/7 phone answering so that you never miss a lead, or your increased lead qualification and intake and appointment scheduling needs once the business starts growing. Fortunately, when you partner with the virtual receptionists at, we can take care of all that, and so much more. 

Ask about how we can assist with outreach campaigns and outbound sales in the first place, and what we can do to help you create a custom strategy for managing your needs, no matter how big or small those might be. While you’re learning how to be an income-earning business owner, let us handle the rest of the details. 

To learn more, schedule a consultation to discuss what the virtual receptionists at can do for you, or drop us a line at

Business Education
Written by Samir Sampat

Samir Sampat is a Marketing Manager with He has experience working with businesses of all sizes focusing on marketing, communications, and business development.

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