How to Pay Yourself as a Small Business Owner

One question that a lot of entrepreneurs ask is : ‘How do I pay myself as a small business owner?’

Whether you’re a sole trader, freelancer, or run a small team, paying yourself the right way is key to managing both your personal finances and your business cash flow.

This guide breaks it down step by step, no confusing legal terms, just clear, practical advice.

Separate Your Business and Personal Finances

The first step is simple but crucial: Open a separate bank account for your business.

This helps you:

-Track business income and expenses.

-Avoid mixing personal and business spending.

-Make tax time way easier.

Choose a Regular Pay Schedule

Treat yourself like you’d treat any employee. Even if you’re the only person on the team, paying yourself on a set schedule helps you:

-Stay consistent with budgeting.

-Build good financial habits.

-Manage business cash flow more effectively.

Examples:

-Pay yourself every 2 weeks (biweekly)

-Pay yourself monthly on a fixed date

Decide How Much to Pay Yourself

When deciding how much to take from the business, consider:

–Your personal expenses: What do you need to cover rent, bills, food, etc.?

–Your business health: Are there enough profits to afford regular payments?

Start with a sustainable amount and increase as your business grows.

Transfer Money the Right Way

To actually pay yourself:

–Transfer funds from your business account to your personal account.

–Label the payment in your accounting system (e.g. ‘Owner’s Draw’ or ‘Owner Pay’).

–Record it regularly and track over time.

You don’t need payroll software unless you’ve registered your business as a corporation or are paying employees.

Plan Ahead for Taxes

As a small business owner, no one is withholding taxes for you. You’ll likely need to:

-Set aside 20–30% of your income for taxes

-Make quarterly estimated tax payments

Tip: Use a simple accounting tool like Built to keep track of your income and how much tax you’re saving.

Keep Your Records Clean

Even if you’re paying yourself manually, make it a habit to:

-Track all income and expenses

-Log every payment to yourself

-Review your business’s cash flow regularly

Tools like Built make this easier by automating your books and categorizing payments correctly.

Summary

Here’s the basic process:

-Open a business bank account

-Set a pay schedule

-Decide on an amount that’s sustainable

-Transfer money from your business to your personal account

-Track it in your records

-Set aside money for taxes

This keeps your finances clean and your business stable without getting buried in complexity.

Bonus Tip: Don’t Be Afraid to Pay Yourself

Many business owners hesitate to take money out of their business. But remember that you are the business’s most valuable asset.

Paying yourself helps you stay motivated, avoid burnout, and build long-term sustainability.

Need Help with Small Business Finances?

At Built, we help small business owners like you take control of their finances; whether it’s simplifying your bookkeeping, managing cash flow, or figuring out how much you can really afford to pay yourself.