how to pay yourself as an entrepreneur

how to pay yourself as an entrepreneur

First things first: You deserve a nice, crisp, virtual high-five from yours truly.

You’ve tackled the first (& many times hardest) money hurdle of entrepreneurship, which is actually getting people to pay you for what you do.

It’s a big deal. Revel in that for a second.




Okay, we’re done. But I’m sure that now you’ve got money flowing into your business, you’re not exactly sure what to do with it from there.

How much do I need to save for taxes?

What do I reinvest?

Can I afford a new computer?

How much should I pay myself?

Today, we’re tackling the last of those and diving into exactly how much money you should be taking out of your business to put back into your pocket. I mean, a girl’s got to eat. And pay rent. And afford her weekly Starbucks because GET ME OUT OF THE HOUSE.

Now, the two-word answer to how exactly you do that is this:

It depends.

I know, crappy answer. But your goals & the stage of your business greatly affects how much you can & should be taking out of your business.

Thus, I’ve laid out how much you should pay yourself at every point along the entrepreneurial path as you start scaling & growing that idea of yours into a full-fledged company.

PLUS, I share insight into where I’m currently at in the game (and what that looks like for me), so dive right in, lady! It’s all waiting for you below…


I think if I ever gave a college commencement speech, I would shout from the rooftops (or maybe just the stage) to every new college graduate in attendance to get a freaking side hustle.


Because it diversifies your income streams. It will help you pay your loans off faster. It will allow you to make more based on your level of effort AND chase a passion your full-time job may not afford.

Plus, how bada$$ is it to be the own boss of your own little company? And get to deduct the cost of that new computer you’re using to service your clients?

However, the end goal of side hustles can be very different and usually fall into either the “Forever” or “Stepping Stone” category. And how you pay yourself in each of those situations is not the same. Here’s how to determine what to do at this stage.


Don’t want to quit your full-time gig? Your side hustle just a passion project that just brings extra $ CASH $ every month?

Props to you, lady. You’re a cash queen.

For you, anything besides your basic expenses or what you want to reinvest back into the business (think for a new computer, training course, or software), can be paid out to you and put in your pocket.

This is strictly an income buffer for you, so use it as such. Take the money out, use it how you may, and continue on, you soldier you.


Unfortunately, when you are in full-on growth mode to get your business to a point where you can go full-time, the amount you pay yourself is slim-to-none.

Your full-time job should be covering all of your basic expenses and maybe a few of the investments you need to make to get your business up and running.

Most of what you bring in should then either be focused on investing in your biz OR building up a little nest egg so that you can quit your job and focus a majority of your time on getting this thing off the ground (without having the electricity turned off on you).

I get the struggle with this – I’m currently in this stage. It’s HARD to put so much work into something and see next-to-nothing in your personal bank account to show for it.

But I also know that if I stay disciplined and continue to invest in myself and my biz, great things are to come. I just have to leverage the money I do have to make that happen.

And let me give you a little leeway here: It is ok to take a little bit out for all that work (think 5-10% of profit), but don’t go overboard. If you truly want to make this your main gig, you need to sacrifice a little now to get exactly what you want later.


Just starting out full-time with your new biz or maybe still haven’t hit your income goal yet?

You’re a fledgling femtrepreneur, sister, and you’re doing some big things.

However, that doesn’t mean we can start drinking champagne and eating avocado toast every morning.

At this stage, you are bringing in a decent or comfortable amount of income per year. It could come steadily each month or in & out like the tides, but how much you transfer to your personal bank account should not differ in either situation:

You want to pay yourself a steady paycheck and only enough to fund your basic living expenses.

For instance, let’s say you earned $48K (after tax) last year in your business, which is roughly $4K per month. Some months you earned $12K, others you barely scraped by, but it total, a pretty damn good year for a newbie.

In turn, the amount it costs you to live each month, including rent, groceries, savings for a vacation when winter freezes your bones and you contemplate moving for the umpteenth time, etc. comes to $3,000.

So here’s what you do: each month, pay yourself the $3,000 it takes to cover those normal expenses. Then every quarter or year (you can decide how often), look at what you still have left in the business that isn’t being used for future investments and pay yourself a bonus.

And that’s it. Plain & simple.

Too many entrepreneurs see big floods of money come into their biz and quickly spend all that cash because they assume those floods will always be there.

However, they miss forecasting the drought that was right around the corner, which causes INSTANT PANIC. You get into sell, sell, sell mode, and that means you either bring in the wrong clients or don’t sell at all. I mean, people can sense the desperation, lady.

By paying yourself the same amount per month, you are mitigating that risk and allowing yourself to not stress when the money isn’t pouring in. AND it will give you the opportunity during those months to plan your next big launch are do some back-end business work.

I mean, some business are simply cyclical in nature, and this ensures that you’re covered each and every month out of the year.

Jenna Kutcher actually did a great podcast on how she did this, and I highly suggest you take a listen. You can find it here.

Now one other word of caution before we move on:

At this point, you’ll probably want to be paying yourself either through LLC distributions OR an S-Corp salary/distribution mix. If you’re still in the $0-$3,000 range in monthly income, the former will probably still suffice. When you get beyond that, it’s time to talk to a tax accountant (like yours truly) to see how to transition & save more in taxes (more on that in a second).


You’re making bank, killing the game, and bringing in new clients like it’s no one’s business.

Here is where you can actually pay yourself like the boss that you are.

This stage is essentially like the prior once except it’s on steroids:

You have a little more wiggle room, so you can pay yourself more. And maybe, like, a lot more.

You still want to ensure you’re paying yourself a steady amount each month; however, just like when you were a fledgling entrepreneur, you’ll up your pay by giving yourself periodic bonuses. This way, you’re making sure that you don’t take all the money out of the business to fund your travel habit to only find that it caused you to go bankrupt in the process.

OR feel free to choose to keep that money in the business and reinvest into something that will take it to the next level. Either way, you’re sitting pretty.

I would also caution here that if you are still operating as an LLC, you may want to elect to be taxed as an S-Corp. By doing this, you can pay yourself a salary (and therefore have future rights to Social Security or whatever is *hopefully* in place at that point) AND take out distributions (which will help you curb your self-employment tax bill).

More on that in a later post, but make sure if you’re at this stage, you’re looking into this. It could potentially mean thousands of savings!

Alright, lady, we’ve come to the end of our time together today. I hope you gleaned some valuable information from the post and are all equipped to pay yourself at every stage you go through.

But before you leave, I’d love to hear from you: How do you currently pay yourself? How do you stay disciplined? Help your fellow sisters out and share your strategies!