When Should You Pay Yourself from Your Business?
Paying yourself as a small business owner isn’t as straightforward as writing a cheque to yourself. It’s one of the most common questions we hear from entrepreneurs: “When is it the right time to pay myself?” In this article, we’ll explore the key considerations and provide practical guidance so you can start making decisions with confidence.
Why Paying Yourself Matters
Many business owners put every dollar back into the business, thinking it will help the company grow faster. While reinvesting is important, forgetting to pay yourself can lead to burnout and frustration. Paying yourself regularly gives you financial stability, a clear picture of what your business can sustain, and the freedom to plan both your personal and business finances with confidence.
How Often Should I Pay Myself?
The answer depends on your business structure and cash flow. Some owners pay themselves weekly, others monthly, and some do a mix depending on profits. The key is to create a consistent routine that aligns with your revenue cycles, so you don’t end up dipping into emergency funds or leaving your personal expenses uncovered.
Can I Pay Myself from Profits Only, or Anytime I Want?
Business owners often wonder whether they have to wait until the business makes a profit before paying themselves, or if it’s okay to take money as it comes in. Understanding the difference between cash flow and profits is key to making smart decisions.
Should I Pay Myself a Fixed Salary or Take Variable Draws?
Some entrepreneurs prefer a consistent amount each week or month, while others adjust based on revenue. Choosing the right method depends on your business structure, your personal needs, and how predictable your income is.
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How Do Taxes Affect How Much I Pay Myself?
Taxes can be tricky. The way you pay yourself, salary, dividends, or drawings affects how much tax you’ll owe and when. Small missteps can leave you underpaid or facing unexpected tax bills.
When Should I Revisit My Pay?
As your business grows, your ability to pay yourself may change. Periodically review:
Your business profits and projections
Your personal financial needs
Any major business investments coming up
Adjusting your pay as your business evolves ensures you stay aligned with both your personal and professional goals.
What’s the best way to track and manage my pay?
If bookkeeping is consuming too much of your time or becoming overly complex and challenging to manage, hiring a bookkeeper can be highly beneficial. This ensure’s accuracy in your financial records and compliance with relevant regulations, allowing you to focus your energy on growing your business without the stress of handling the numbers yourself.
Ready to Take the Next Step?
Knowing when and how much to pay yourself is just the start. Our Pay Yourself Course dives deeper into setting a sustainable system, creating a reliable pay schedule, and building confidence in managing your personal and business finances.
Start taking control of your money, reduce stress, and learn to pay yourself with confidence. Check out the Pay Yourself Course
Assessing these factors can help you determine whether it's time to hire a bookkeeper to ensure your financial health and support your business growth.
By dedicating some time to familiarise yourself with these tools, you can maintain accurate financial records, ensuring a clear picture of your financial health without the need for professional bookkeeping services.
At Ako Cash Flow, we’re not just bookkeepers—we’re your financial empowerment partners. Our mission is to give you the confidence and skills to manage your own books with ease. With our tailored tools and expert guidance, you’ll learn how to track income and expenses, master cash flow, and make smart financial decisions that support your goals. We believe that financial independence is key to long-term success. That’s why our approach focuses on education and support, enabling you to take control of your personal or business finances and build a stronger financial future. Let's empower your journey together!
