Key takeaways
How you pay yourself depends on your business structure — sole proprietors and single-member LLCs use an owner’s draw, while S-corp owners are required to pay themselves a reasonable salary through payroll.
Consistently deferring your own pay while reinvesting everything creates personal financial instability that bleeds back into business decision-making.
Tax planning is the right moment to audit whether your personal income is actually reflected in your financial picture – before you head into a new year with the same flawed pattern.
Let me ask you something that I ask almost every client at some point: “How much did you pay yourself last year?”
The pause that follows that question tells me everything.
Some people laugh nervously. Some pull up a spreadsheet. And some quietly admit they have no idea, because they’ve been reinvesting everything, paying their team, covering expenses, and somewhere in that shuffle, their own paycheck became optional.
If that’s you, I need to tell you something — without any judgment — paying yourself is not a reward for when business gets easier. It is a fundamental part of running a financially healthy business.
I remember sitting with a client who ran a digital marketing agency, going through her financials line by line during a coaching session. When I asked her how much she was paying herself, she got quiet and said, “Whatever was left over, which most months was nothing.”
So we did an investigation. We traced where everything was going, subcontractors, software, operational costs, and what we found was that she had been underpricing her services from the start. And because her offers weren’t scoped tightly, every project came with extra deliverables, extra revisions, extra hours she hadn’t planned for. By the time everything else was covered, there was nothing left for her.
What struck me most was the shame she felt about it. Because she wasn’t failing her clients, she was helping them have massive launches and huge results, and she was working constantly. She was failing because she wasn’t paying herself while she did it.
That’s more common than people admit. A lot of business owners have a deep devotion to service, and because of that, they end up putting everyone else’s financial needs before their own. It’s not always a mindset issue. Sometimes it’s just that no one ever showed them how to build their own pay into the structure of the business.That’s what tax season is for, not just to settle up with the IRS, but to actually look at where your money went and ask honestly: Did I make it onto that list?
My eBook A Business Owner’s Guide To Optimizing Tax Deductions includes deduction checklists, documentation requirements, and advanced tax strategies. Get the eBook and start keeping more of what you earn.
Profit on paper doesn’t equal money in your pocket
You can have a profitable business and a personal bank account that feels completely empty. That gap between what the business generates and what actually reaches you is one of the most common and damaging patterns I see. Tax season makes it impossible to ignore, because suddenly you’re looking at a full year’s numbers and asking yourself, “Where did it all go?”
How you pay yourself depends on your business structure:
Sole proprietors and single-member LLCs pay themselves through an owner’s draw, which transfers money from the business account to your personal account.
S-corp owners are required to pay themselves a reasonable salary run through payroll, with taxes withheld, and then may take additional distributions on top of that.
Either way, you’re not off the hook for taxes. How taxes are paid might look different, but the obligation remains the same.
The reinvestment trap
There’s a version of financial discipline that looks responsible but is actually a destructive, slow leak. Every time there’s money in the account, something “more important” needs it. You find yourself needing another certification, a new hire, photos for an upcoming campaign launch. Your own pay keeps getting put off.
I want you to understand clearly that your personal financial stability is a business decision. When you’re not paying yourself consistently, you create pressure in your own life that bleeds directly into how you run the business. You start making decisions out of scarcity rather than strategy.
Paying yourself should be part of your business’s structure.
Most people build their pricing by adding up their expenses and hoping there’s something left over for them. I want you to reverse that. Decide what you actually need to pay yourself — not someday, not eventually, but now — and let that number anchor your entire business model. From there, you layer in what you need to set aside for taxes, what your operational expenses actually cost, and what that means for the rates you have to charge. This will inform you on what you need your gross revenue to be.
When you build your business finances in that order, your pay stops being the last line item and starts being the foundation everything else is priced around. That’s not a luxury you earn later. That’s the structure from day one.
Before you close your books this year
Ask yourself honestly:
Did I pay myself a consistent, intentional amount or just whatever was left?
Is my personal income reflected in my actual financial picture, or have I been running on empty while the business looks fine on paper?
Do I know what I owe in self-employment taxes, and have I set enough aside to cover it?
These questions aren’t meant to make you feel behind. They’re meant to help you walk into the new tax year with a plan that has both your business and your personal finances working.
TurboTax Experts for Business help you see your business income clearly, identify deductible expenses, and understand exactly what you owe — so you’re not guessing, and you’re not leaving money on the table. Your business made money. Make sure you did, too.
A Business Owner’s Guide To Optimizing Tax Deductions walks you through exactly which business expenses are deductible, how to calculate them, and what documentation you’ll need to back up your claims. Get the eBook and start keeping more of what you earn.
