If you’re paying yourself whatever is left after your software, contractors, taxes, and business investments are covered, you don’t actually have an owner pay strategy. In this episode of The Real Truth About Business podcast, I’m breaking down how to think about paying yourself as a business owner, including how much you should pay yourself, how often you should get paid, and why your payment schedule needs to reflect how money actually flows into your business. After 9 years of experience working with service-based entrepreneurs, I see too many owners generating revenue while treating their own paycheck as optional. Your business strategy should support your life, and that means intentionally planning for owner pay instead of hoping there’s money left over. We’ll talk about personal income needs, cash flow, payment cadence, owner draws, and how to make investment decisions after accounting for your paycheck. Revenue growth matters, but financial strategy is what turns that revenue into a business that actually pays you.

What You'll Learn:

• How to determine how much your business actually needs to pay you
• Why “whatever is left” is not a sustainable owner pay strategy
• How your business structure can affect the mechanics of paying yourself
• How to create a payment schedule based on when revenue enters your business
• How percentage-based owner pay and reserve accounts can create consistency
• Why investment decisions should account for your paycheck before you spend the money

Episode Highlights:

[00:00] Introduction: How much are you actually paying yourself?

[02:15] Why owner pay is part of your overall profit strategy

[05:00] Why paying yourself last needs to stop

[07:15] Owner draws, S Corps, and how business structure affects payment

[09:30] Determining how much your personal life needs from the business

[11:00] Matching your paycheck cadence to when your revenue comes in

[13:30] Using percentages and reserve accounts to pay yourself consistently

[16:00] How investments affect your paycheck and cash flow decisions

[18:15] The two numbers every business owner needs to know

[20:00] Wrap-up: Making owner pay a routine part of your business

Key Takeaways:

Stop Paying Yourself Whatever Is Left

Here’s what I hear constantly when I ask business owners how much they pay themselves:

“I don't know. Whatever is left.”

Or:

“I take a draw when I need it.”

Meanwhile, the business is paying for software, contractors, taxes, programs, marketing, and other investments. Then you look at the bank account and decide whether there’s enough remaining to pay yourself.

That is not a payment strategy.

If we’re building businesses that are supposed to support our lives, we cannot consistently treat ourselves as the last person who gets paid. Your business needs to have an intentional plan for paying you.

Start With What Your Personal Life Actually Requires

Before deciding how much to pay yourself, look at your personal expenses.

What does your business need to provide for your life?

If you need $3,000 per month to cover your personal expenses, that needs to become part of the financial plan. You shouldn't automatically drop your paycheck to $1,500 because you decided to spend another $1,500 somewhere else in the business.

Think about it another way.

If you were looking for a job tomorrow, what is the minimum salary you would accept?

Most of us would never take a job without considering whether the salary could support our lives. Yet we become business owners and suddenly stop applying that same standard to ourselves.

Your business may not be able to pay your ideal amount immediately, especially if it's newer. But you should at least know the number you're working toward.

How You Pay Yourself Depends on Your Business Structure

The mechanics of paying yourself can depend on your business structure.

For many single-member LLCs and sole proprietors, that may mean taking an owner's draw by transferring money from the business to yourself. As I explain in the episode, an owner's draw is not treated as a business expense on your profit and loss statement.

An S Corporation works differently and generally involves paying the owner reasonable compensation through payroll.

This is where I want to be very clear. I am not a CPA, tax strategist, or lawyer. Work with your own qualified tax professional to determine the appropriate structure and payment method for your specific business.

Your Pay Schedule Should Match Your Cash Flow

One of the reasons business owners struggle to pay themselves consistently is that business revenue doesn't always arrive consistently.

This is where understanding your cash flow becomes important.

Look at how your clients actually pay you.

Maybe most of your recurring payments arrive between the 15th and 25th. It may not make sense to take identical weekly paychecks when most of your revenue enters the business later in the month.

You could instead take a larger monthly payment after that revenue arrives.

If your income is project-based and comes in throughout the month, another option is deciding that a percentage of each payment goes toward owner pay.

The goal is to build a cadence around how your business actually makes money.

Create a System That Makes Paying Yourself Routine

Paying yourself shouldn't be something you remember to do after everybody else gets paid.

It should become routine.

One option I use is creating a separate reserve account specifically for owner pay. A predetermined percentage of deposits can automatically move into that account, creating a pool of money specifically designated for your paycheck.

Then you're not looking at one big bank balance and mentally treating all of that money as available to spend.

You've already identified what's yours.

Inside the Focused Visionary Framework, we talk about Pricing, Pipeline, and Sales because those are what help generate the revenue. But financial strategy answers the next question: What happens to that money after it arrives?

Make Investment Decisions After Accounting for Your Pay

Paying yourself first doesn't mean you can never invest in your business.

It means you understand what the investment is actually costing you.

If you want to invest in a new program, contractor, piece of software, or other opportunity, ask what that decision affects.

Does it reduce your paycheck this month?

Does it require debt?

Could you wait until more revenue comes in?

Would a payment plan make more sense?

Could you create a cash injection offer to generate the additional money?

There isn't one universal right answer. The important shift is making the decision from facts instead of spending the money first and discovering afterward that there isn't enough left to pay yourself.

Know Two Things: How Much and How Often

There are two key decisions I want you to make.

First, how much do you need and want to pay yourself?

Second, how and when are you going to pay yourself?

Maybe that's a percentage of every dollar that comes in. Maybe it's one lump sum each month. Maybe you create a reserve account and pay yourself on a consistent schedule.

Your exact system will depend on your revenue model and financial situation.

What matters is that you have a system.

Revenue Growth Is Only the Beginning

Business strategy can help you generate more money.

Financial strategy helps you decide what to do with it.

That's the conversation I want us having more often because generating impressive revenue doesn't mean much if the business still isn't paying the person running it.

So start with your numbers.

Determine how much you need to pay yourself. Look at when money enters your business. Decide how you're going to create a consistent owner pay cadence.

Then make your other financial decisions around that reality.

You are the CEO. Your paycheck needs to be part of the plan.

Resources Mentioned

• Get your FREE Ceo Income Plan
• Book a CEO Strategy Call
• Learn more about The Missing Piece Intensive
• Learn more about The Focused Visionary Accelerator
• Download the FREE Lead and Conversion Tracker
• Subscribe to the Sunday Morning Brew Newsletter

About the Host:

Michelle DeNio is a business strategist based in Sarasota, Florida, specializing in helping service-based entrepreneurs break through revenue plateaus using her Focused Visionary Framework. With over 300 podcast episodes and 9 years running her consulting business, she helps coaches, consultants, and service providers scale sustainably through strategic planning, pricing optimization, and sales process development.

Connect with Michelle

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I'm going to ask you a question.

How much are you paying yourself out of your business?

And if you can't answer that question or the answer is whatever is left, you are not alone.

And this episode is for you, okay?

Because this is the answer I get a lot of times when I ask my clients this question is, I don't know, whatever's left, right?

Or I just take a draw when I need it.

You pay your software, you're paying contractors, you're paying for your.

You're putting money into taxes, you're reinvesting, investing, investing back into your business.

And if there's money left over, you take some of it, okay?

But that is not a payment strategy, right?

And if we are building businesses that are supposed to support our lives, why are we treating ourselves like the absolute last person to get paid now?

Not saying I haven't been here, not saying I haven't done this, but I'm also saying, like, this shit stops now, okay?

Because we are business owners.

We work our asses off in these business, and we deserve to get paid.

So that's what I want to talk about today is how much should you actually be paying yourself?

How often should you be paying yourself and why?

I want you to stop thinking about.

Owner pay is something that happens after everything else is taken care of, okay?

Because revenue is not the only goal, okay?

And even profit, and I talk a lot about profit.

Profit is not the only goal, okay?

The business needs to pay you first, okay?

So that's what we're talking about today.

This one might be a little bit harder to digest, and one that we're like, I don't know how to make this happen.

I'm going to help you, I promise, okay?

So stick with me.

This one is important.

I want you paying yourself, and I want you paying yourself first, okay?

So let's dive in.

All right?

So, like, elephant in the room, I.

Let me tell you where this came from.

Okay?

Let me give you a backstory.

So, number one, I think if you've been listening to the podcast and you've been around a while or recently, you know, I made a decision to.

That I was going to start offering more of the accounting services that I have had in my back pocket for years on years on years and have not really been talking about.

So if this one feels like, why all of a sudden is Michelle talking about financial and paying yourself and all these things?

That's because that's really what I want to do, okay?

Like, these are skills that I have had for the past 20 plus years and I just haven't really brought them to the forefront of my business.

But financial profit strategy, paying yourself cash flow, which I know cash flow is a big word we don't all understand, but basically the cash that comes in your business, how are you using it?

I am going to be talking about it and I started to create some resources around it.

I have new offers around it, a lot going on.

So that's why all of a sudd we're you're going to start hearing episodes like this on the podcast that are really very much financial strategy because I am now doing business and financial strategy.

I'm calling it profit strategy because that's, I want to make sure that we're profiting right.

And this is part of the profit strategy.

So that's the little backstory on that.

But then I was talking to, I don't remember exactly, and I said something about like paying yourself first.

And I was going to create an audio series around paying yourself first.

And I put it out to people and I was like, what do you think about this name?

And so many people said to me, well, I don't under, like, I don't know if I would opt into that because I don't realize, I don't really understand why that's so important.

Like, I don't know, like paying yourself first, like why?

And I was like, g, we have a lot of work to do.

Okay, so in other news, I did record the pod, the audio series, but I took it a slightly different direction and it's called your CEO income plan.

I'm going to make sure the link is in the show notes for you.

It's a six part audio series with a workbook.

Well, it's not really a workbook, but it's a companion guide thing that you literally can go through and create your CEO income plan.

And we talk a lot about paying yourself in there.

So go jump into the show notes and click that link and go listen to that audio series.

After you get done listening to this podcast episode, that one goes further.

It's going to help walk you through it a little bit better.

Okay, so again, when I was saying pay yourself first, I thought that sounded very obvious, but then people told me they didn't understand why.

So first and foremost, let's just say, like, you need to be paying yourself first out of your business.

Okay.

Period, hard stop.

End of story.

Okay.

But there's so much noise in business that we need to be investing.

Investing.

Are you investing into your business?

Are you hiring?

We Talked about this on the episode a couple weeks ago around outsourcing too soon and, like, why I think that is happening.

But we're always constantly buying another program, another hiring another person, buying another piece of software, right?

Doing more marketing.

And a lot of times we're doing that.

And then we're looking at the cash balance at the end of the month, and it's like, I've got a thousand dollars left in my bank account, and so I'll draw and take 500 of that or whatever.

And that's not enough, right?

Like, maybe it is.

Maybe it is for you.

I don't want to judge that.

I'm.

I'm not trying to judge that.

I'm just saying, like, we don't get what's left.

We pay ourselves first.

And then if there is money left over, that is when you can start to invest.

Because what's also happening a lot in the online space and I. I definitely made this mistake in the beginning as well, is that we were willing to put a lot of things on credit cards so that we could continue to pay ourselves, right?

While building up all of this debt.

And now it' like, okay, now I have all this debt, and so now we're working to pay down debt, and then that cuts into your paycheck as well, right?

So I want you to really hear this.

You are running a business, not a nonprofit, okay?

And you are the big, biggest, and best employee.

You get paid first, okay?

But again, like I said, people are hiring all these contractors, they're hiring all these other people, and then they're getting what is left.

And.

No, no, no, no, no.

Okay?

Your business needs to support the life that you are trying to create.

All right?

So how do you pay yourself now?

I am not a tax strategist.

Full disclaimer.

I am not a tax strategist.

I am not a certified public accountant, okay?

And I am not a lawyer.

So I am giving you consulting in this episode.

But how you pay yourself really does depend.

Depend on your business structure.

I am typically speaking to those of you that are a single member llc.

Okay?

Most of us are single member llc, sole proprietors.

All right?

And so you are taking owner's draws, meaning when you need money, you draw it out, and it.

You take it as an owner's draw, okay?

You transfer money from the business to yourself, and the draw is not a business expense on your profit and loss statement, okay?

And your taxes are based on your taxable income, not on your draw.

Okay?

Again, I'm not a tax accountant.

Now, S Corps are required to pay the owner a reasonable compensation through payroll, Meaning you get a W2 from your business at the end of the year, just like you did when you worked at a job and you got a W2, right?

You have to pay yourself every single whatever.

Most of the time it was like it could be monthly, it could be weekly, it could be my, you know, every other week.

Again, that doesn't matter.

But you have to pay a reasonable salary.

All right?

This, you really need to work with your cpa and you really need to find a good cpa because I'm telling you, a lot of people switch to escort too soon, myself included, and it is a freaking nightmare, in my opinion.

That's, again, personal opinion.

I think that if you have a really amazing CPA and tax strategist, there is a time and a place for it and it definitely does help you tax wise.

But I don't want to get into all of that.

Okay?

What I really want to talk about in this episode is really looking at how much do I need to pay myself.

Okay?

And the first thing you need to do is really look at your personal expenses.

Okay?

What are your personal expenses?

What are you wanting this business to pay for?

To support your life, okay?

Not your business expenses.

We're talking personal expenses only.

Okay?

So if you need $3,000 a month to cover your personal expenses, depending on.

Again, everybody's situation is different.

Then we need to make sure that you are drawing out $3,000 a month every single month to pay you first and not fifteen hundred dollars because you spent fifteen hundred dollars on somebody else or not.

No, no, no.

Right.

We figured out.

Now here's where I think it's important to note is that one of the things that you need to do is really look at how you get paid.

Because I think this is why a lot of business owners don't pay themselves.

Correct.

Like, consistently is because income as a business owner doesn't always come in consistently.

Right?

So you have to really take a look at that and understand how you get paid.

Right.

First and foremost, like, how is your business set up to pay you?

Meaning how do your clients pay you?

So, for example, I have clients that are on retainer.

FDA is a retainer.

They pay every single month.

Most of that money comes in around the 20th.

So it is unreasonable for me to think that I am going to take the same paycheck every single Friday when a good chunk of my money that I make every single month in my business comes in from the 15th to the 20th, 25th ish of the month, right?

So if I know that I can then look at and see, okay, from the 15th to the 25th, that is when most of my money comes in.

That is when I'm going to give myself the biggest paycheck.

Because that's when there's revenue income in the bank, right?

So again, I'm not you now, you could manage your cash flow, right?

This is what I talk about by cash flow is like if you know that your money comes in on the 20th of every single month and you just let it sit in your bank account, in your business account, maybe you put it into a separate account.

There's all these accounts now that allow these reserves where you can have all these different accounts.

You know, you can put that money into an account to where you're just drawing off of that.

All right?

So there's ways.

This is, this is what I mean by profit, cash flow strategy.

And this is why I'm now offering this as a service.

Because this is so hard for so many of you.

It's very hard to figure this out.

But you have to know when your money is coming in.

Okay?

So that's one way is like you can say, okay, my money comes in.

Most of my money, I get paid on the 20th, so I'm going to take a paycheck on the 25th, and it's going to cover my bills for the month, right?

Like, you could take one lump sum and pay yourself once a month when your money comes in and be done with it.

That's one way.

The other thing is, is if you take pro, like if you're on more of a project base and your money kind of comes in scattered throughout the month, you could also look at and say, okay, what percentage of every pay, like every invoice that I send out, what percentage am I going to take towards my paycheck?

So it could be 30%, could be 40%, could be 50%, you know, depending.

Again, there's, there's so many different factors here.

Everybody's life, business tax is different.

But that's another way to look at it, is like, okay, I, I do this big project, I get paid in full.

It's a $5,000 offer.

And you make your decisions from there.

Right.

You're making these educated decisions based on what is left in your business.

So like you're not investing something if you don't have the cash flow for it.

Right?

Like again, time and a place.

Sometimes it's.

It's makes sense to take on debt.

I'm not saying that it never makes sense to take on debt, especially if you can get 0%, all the different things, right?

Like there are a lot of different ways to do this.

But what I want you to do is at least start thinking about it, right?

I want you to really start thinking about it because I can't dive into too many details in this particular episode because it would be too confusing.

It's a numbers thing.

You guys don't love numbers in the first place, most of you, right?

It's confusing.

On audio, I can only imagine.

Like on audio it's very confusing to really think about.

That's why I also did, when I did the CEO Income plan as an audio series, I was like, I have to have a companion like sheet for that them that they can literally walk through this and go through it.

So please download that because that's going to help you.

And then of course, if you want even further help with this, like let's talk about the profit and cash strategy offer that I have.

I will link that as well in the show notes because it's new and it's fun and it's exciting and I love it.

And I can't wait to dive in everybody's numbers.

Like there is nothing that lights me up.

I literally created this like payment plan for myself, like pay schedule for myself.

It's color coded based on when business expenses come out, based on when personal expenses come out, how much I'm paying myself on each paycheck.

So I'm paying myself four times a month.

I love it.

I'm.

I would freaking love to do it for you as well.

But the two key points here is that you need to pay yourself consistently and you need to figure out how you are going to pay yourself and when you are going to pay yourself.

Okay, so are you going to pay yourself a percentage of every dollar that comes in?

Are you going to pay yourself a lump sum once a month?

Are you going to put money aside so you can set it up?

Like if you use Relay or I use Novo banking, I have it set up to where 50% of every deposit goes into a separate reserve account called Pay Myself.

Right.

And that money just sits there.

And so that's what I'm drawing off of every Single week is that money.

So the money that's in there, and I have it figured out, like, I know exactly, I've got it, like I said, broken down.

But you can just create this little bucket for yourself that you draw off of, right?

And then everything else, your business expenses get paid off of what's left.

And again, now what happens if your business can't afford to pay you what you want because you want to make an investment, right?

There are times and places when you want to make an investment.

Well, again, this is now a personal decision of you.

And say, if I invest in this, what, what am I giving up, right?

What is this going to affect?

If I invest in this, am I taking on debt?

If I invest in this, am I saying I'm not going to pay myself this month?

And if I don't pay myself, do I have a backup plan, right?

If I invest into this, do I just need to pay myself a little bit less, right?

Like, or do I just wait to invest in that because more money's coming in, in the next, you know, month, whatever, right?

Like, this is where you get to make the decision of like, okay, I want to pay myself $3,000 a month, but I also really want to invest in this.

I can make the decision from facts.

Again, not emotion.

You're not making it mean anything.

You're making a decision from facts to say, I'm going to choose to invest into this and put it on debt credit, or use my cash and not pay myself, or I'm going to take the payment plan, right?

Like, this is where you now make decisions.

But you make decisions from the I'm paying myself first, not paying myself last, okay?

That's what you want to really think about.

That's the shift is not.

This is like, if I choose to do this, how does this impact my paycheck?

Okay?

And then from there, when you want to make an investment, you look at, is there a way I can do a cash injection offer?

Is there?

You know, like, there's again, I. I could geek out on this shit all day long, okay?

But these are the most important points.

And I'm looking at the clock on this one, and this one's 17 minutes long.

And I just feel like, holy crap, this could be.

This could be a workshop.

And I may turn it into a workshop.

But for now, I've got the audio series.

So I want you to definitely go download the audio series to get you thinking about this a little bit differently.

If you have questions again, shoot them to me on my in My DMS or in my email, whatever.

But here again, the two most important things are how much do you want to pay yourself?

How much do you need to pay yourself?

How much do you want to support in your personal life?

Right?

Like literally thinking, if I were to get a job tomorrow, how much, what is the minimum or what type of paycheck would I be looking for?

Right?

Like I want you to think about it from that perspective is like if you were going in job hunting, you have a certain salary that you are looking for when you are working a job, but yet we become business owners and all of a sudden that salary goes out the frickin window.

And I'm like, why?

No, if we get a job like you're not going to go work for seven bucks an hour, right?

You don't, you can't live off minimum wage, right?

So why are you paying yourself a minimum wage salary out of your business based on what's left, right?

Some of you, that's what you're doing.

And so I want you to think about like what would be the minimum salary that I would accept if I were to go get a job?

And now granted, if your business is newer, depending on where your business is at, you may not be able to make it there yet, but at least you have something you're working towards, right?

And now you're in a position where you can start to make those decisions to pay yourself first again, even if it's a percentage, even if, let's say you're only bringing in $5,000 a month, okay, well if you're going to take 50% of it, well now you've made 2,500, well now next month you make 6,000, now you've taken home 3,000, next month you make, you know, whatever, like you can start to incrementally increase this.

I'm not saying you, you shoot for the moon and you start there.

I'm saying you at least have a number that you are aware of so that you can plan all of your other things around it.

Okay?

So that's first and foremost.

And then the other thing is, is really looking at it and understanding the cadence in which you want to pay yourself based on how your business makes money.

If you are somebody that bills everybody on the first of the month and you know that most of your money comes in on the 1st of the month, well then take your draw on the first or the fifth or the month, right?

Whatever.

Whenever those invoices come in, if you know, like me, that a lot of your Clients come in on the 20th.

Well, then you, you sort your bills and you take your paycheck around that you can set up these reserve accounts so that there's always money that you're.

You're pulling from.

Right?

Like, you've got to have some type of logistics set up so that you can pay yourself.

Right.

So that it's just part of the.

Like, it's just become second nature.

It's just routine.

It's like, okay, I know that my money comes in on the first, so on the fifth, I semi, I. I take a draw.

Right?

Like, it just becomes routine in your business.

And it's not something that you think about at the end of the month or at the end of the week or after you've paid everybody else.

Okay.

That's what you're trying to do here.

And then also too.

But when you have those two things now, you can look at your investment decisions through the lens of if I invest into this or what things does this affect?

Okay.

And how can I plan for that?

Right?

That's essentially cash flow strategy.

So there's a big term that most people don't understand, and I just explained it to you.

So don't be intimidated by these terms in the financial space.

Okay?

We're literally.

When you say cash flow management, which is what I am helping my clients do now, is really looking at when cash comes into the business, how are we managing it?

That's it.

Okay.

And part of that is paying yourself.

Part of cash flow is understanding how in which you pay yourself.

Okay, so we're going to keep talking about this.

There's more coming.

We're going to keep having these conversations around financials and numbers and all the things.

So stay tuned because this is the information you guys need.

Right?

Business strategy only gets you so far.

Financial strategy is what actually pays you.

Right?

Financial strategy is the piece I feel like so many are missing because it's one thing to bring money into the business, but now what.

What do we do with money?

How do we manage the money?

How do we make sure that we're making these great decisions with our money?

Okay.

That's not something a lot of us had training in.

Okay.

I do.

So I want to start helping you guys with it because I see so many people struggling with this.

They are really just struggling and they're like, I don't know.

I don't know.

I don't know.

No, I'm going to start educating you because you are the CEO and you make empowered decisions from facts.

Right?

So step one, go download the audio series.

Step two, figure out how much you want to pay yourself.

Step three, figure out in what way you are going to pay yourself.

Okay.

And if you need help with this, as always, you know how to find me.

My DMs are open.

I promise I will answer you and we will figure this out together.

All right?

I love you.

I believe in you.

And I will talk to you soon.