This is the question that seems to constantly appear in my DMs:

As an independent contractor or small business owner, how do you pay yourself? And how much? 

First of all: You should absolutely pay yourself as a sole proprietor — but in a way that fits with your business.

And there are several different ways that you can go about this. Today, we’ll focus on a couple tips to get you started.

When we start talking about paying yourself from your own LLC, there are really three parts to consider: 

Read on for my thoughts or watch it in video form right here. 👇

How do you pay yourself as a small business owner? 

“…and should you actually write yourself a check?!” 

It’s a funny feeling when you’re both the business owner and the person you’re “paying,” so I understand why I get these questions all the time.

The short answer is: No, you don’t have to write yourself a check.

But if your business affords you the ability to pay yourself, I would love for you to find a system that gets you on a consistent schedule of doing so.

So, first things first: 

Check Out Your Numbers 

Dive into your profit and loss statement. The goal is to really see what your business can afford in terms of compensating you.

Here are my three favorite calculations that every solo provider should know by heart.

Here’s what you need to know about taxes as a small business owner.

And here’s how to tell if you’re overpaying for your credit card processing.

💡 Pro Tip: If you use Schedulicity’s built-in payment processor as part of your booking process, you get industry-low rates and revenue reports, including monthly recurring revenue.

Automate It 

Once you see the trends in your business and you can see how much you can afford to pay yourself — automate.

You already know that sending automated birthday messages, thank yous, and client follow-up emails saves time.

(Here’s how to do that with Schedulicity if you don’t know yet.)

It’s the same for finances. Automated billing saves headaches.

Automated upselling creates more revenue.

An automatic withdrawal makes it rain consistently.

Set it up either every week, bi-monthly, or every month depending on what you feel comfortable with.

What Kind of Money-Maker Are You?

Let’s talk money, honey! Spend it, save it, hustle for it.

Take the Quiz

Go With Your Gut

It’s your business. Pay yourself what you’re comfortable with and pay yourself as often as it works for you.

This will look different for everyone and should be based on your business data (step 1) and no one else’s!  

How much should you pay yourself as a small business owner? 

The big question, right?

So: I recommend paying yourself based on a percentage of your revenue. 

Option 1: Percentage-Based 

It should be something that makes you feel comfortable and that your business can afford. It could be five percent or ten percent or maybe even fifteen — again, running those numbers first is going to give you a clear picture of how much you pay yourself.

Option 2: Flat “Rate” 

Alternatively, you could pay yourself a flat rate — $200 a week, $500 a week — for whatever your business allows.

This is especially good if you have a consistently booked schedule and relatively the same revenue month-over-month.

How do you handle taxes for yourself?

When it comes to taxes, the biggest piece of advice I have is know your numbers. Keep tabs on any money coming in and any money coming out.

You’ll file a 1099 form as a small business owner or independent contractor.

The best advice I have for handling your taxes are to focus on these four areas:

  • Reporting all your income 
  • Reporting all your business expenses 
  • Filing your tax return on time 
  • Making quarterly estimated payments (if you’re predicted to owe over $1,000 at tax time)

💡 Pro Tip: For more expert tax advice, check out Schedulicity’s chat with a true tax pro, Bryanna Barrow: Free Tax Advice for Hair Stylists & Salon Owners.

Conclusion: Make paying yourself easy on yourself

Once you determine what the amount will be, set up automated transfers from your business account to your personal account.

The goal is to “set it and forget it.” That way you’re not wondering about if you should pay yourself but how and when.

Because you do deserve to get paid. And not through Venmo either. 😉

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