How Much Should I Pay Myself From My Business?
How much you should pay yourself depends on your business structure, your profit, and what the business can genuinely afford. As a sole trader, you pay yourself by drawing from your business account and pay income tax on the profit. As a company director, you pay yourself a salary, and the amount should be reasonable, documented, and tax-effective for your situation. Most business owners either pay themselves too little and run into personal cash flow problems or pay themselves too much and leave the business short. The right number sits somewhere in between, and it changes as the business grows.
Who this is for: Business owners who are not sure what they should be drawing from their business, or who know they need to revisit the number but keep putting it off. Covers sole traders, company directors, and trust beneficiaries.
Why this question does not have a simple answer
Most business owners search for a dollar figure or a percentage. They want someone to say: pay yourself 30 per cent of revenue, or take home $120,000 and leave the rest in the business. That does not exist, because the right answer depends on three things that are specific to your situation:
- Your business structure. A sole trader, a company director, and a trust beneficiary each have different rules for how they can take money out of the business, and different tax implications for each method.
- Your business profitability and cash position. What the business earns and what it actually has in the bank after expenses, tax obligations, and working capital are covered.
- Your personal financial needs. What you need to live on, service personal debt, and meet your own obligations.
These three things together determine the answer for your business. What follows is a framework for working it out, not a universal number.
The most common mistake: Taking money out of the business based on what is in the bank account rather than what the business can afford after tax, super, and upcoming obligations. The bank balance is not profit. It is cash. They are different things.
How you pay yourself depends on your structure
The method, the tax treatment, and the flexibility all differ depending on how your business is set up.
Sole Trader
How you pay yourself: Owner’s drawings from the business bank account.
As a sole trader, there is no legal separation between you and your business. You do not pay yourself a salary. You draw money from the business account when you need it, and the ATO taxes you on the profit of the business, not on what you draw.
This means:
- If your business makes $150,000 in profit and you only drew $80,000, you still pay income tax on $150,000.
- If your business makes $150,000 and you drew $180,000, you also pay tax on $150,000 and you have simply spent $30,000 of your previous cash reserves.
- Drawings are not a deduction for a sole trader. Only genuine business expenses reduce your taxable income.
What to do: Calculate your expected annual profit, set aside roughly 30 to 40 per cent for income tax and Medicare Levy (exact amount depends on your income bracket), and treat the remainder as what is available to draw. Do this quarterly, not annually.
Company (Pty Ltd)
How you pay yourself: Salary, director’s fees, or dividends from company profits.
A company is a separate legal entity. You cannot simply take money from the company account. There are three legitimate ways to pay yourself:
- Salary or director’s fees. You pay yourself a wage, the company deducts PAYG Withholding, and you receive the net amount. The salary is a tax deduction for the company. You pay income tax at your personal marginal rate on the salary.
- Dividends. The company pays you a dividend from after-tax profits. Dividends can be franked (carrying a credit for the 25 per cent company tax already paid), which reduces the additional tax you pay personally. Dividends are not a deduction for the company.
- Combination of both. The most common approach for established businesses is a modest salary (to build super entitlements and cover personal income needs) plus a franked dividend at year end once the profit picture is clear.
Division 7A warning: Taking money from a company account without documenting it as a salary, dividend, or formal loan triggers Division 7A. The ATO treats undocumented withdrawals as unfranked dividends taxable at your full marginal rate with no franking credit. This is one of the most common and costly mistakes company directors make.
Discretionary (Family) Trust
How you pay yourself: Distributions to beneficiaries, including yourself.
A trust does not pay income tax itself. Instead, it distributes income to beneficiaries each year, who pay tax at their own rates. As the business operator, you are typically one of several beneficiaries.
The trustee (which may be a corporate trustee or individual trustees) decides each year how much to distribute to each beneficiary. Common strategies include:
- Distributing up to the tax-free threshold to adult family members on lower incomes.
- Distributing to a corporate beneficiary at the company tax rate of 25 to 30 per cent, retaining cash in the corporate structure for reinvestment.
- Distributing to yourself to the extent you need income, balancing against distributions to lower-income family members.
Important: Trust distributions must be resolved in a trustee resolution before 30 June each year. If no resolution is made, the income may be taxed at the highest marginal rate of 47 per cent. This is a common and avoidable mistake.
Coming 1 July 2028 – a change worth planning for now
The 2026–27 Federal Budget proposed a 30 per cent minimum tax on the taxable income of discretionary trusts, from 1 July 2028, paid by the trustee. Non-corporate beneficiaries (individuals and other trusts) will receive a non-refundable credit for tax paid by the trustee. Corporate beneficiaries will NOT receive this credit. This is deliberate, to prevent corporate beneficiaries from converting it into a refundable franking credit and circumvent the minimum tax. In practice this reduces the benefit of the first strategy above: distributing to lower-income family members would no longer drop the tax rate below 30 per cent.
The Government has also flagged expanded rollover relief for three years from 1 July 2027 for small businesses that want to restructure out of a discretionary trust into a company or fixed trust. Note: testamentary trusts established for genuine testamentary purposes are exempt from the 30% minimum tax; this change applies to standard family discretionary trusts, not testamentary structures The proposed 30% minimum tax on discretionary trusts will not apply to all discretionary trusts provided they are established for genuine testamentary purposes.. If your business income runs through a family trust, this is worth modelling well before 2028 rather than in the year it applies.
A practical framework for working out your number
Whatever your structure, the process for working out how much to pay yourself follows the same logic. Start with what the business earns, subtract what it owes and needs, and pay yourself from what is genuinely left.
Step 1: Know your real profit
Not revenue. Not bank balance. Profit after all operating expenses, before owner payments and tax. Run a profit and loss report in Xero or ask your accountant for the number. If you do not know your profit, you cannot make a sensible decision about what to pay yourself.
Step 2: Set aside your tax obligations
Before you pay yourself anything, you need to know what the ATO will want. As a rough guide:
- Sole trader earning $100,000: Set aside approximately 30 to 32 per cent for income tax and Medicare Levy.
- Sole trader earning $150,000: Set aside approximately 37 to 39 per cent.
- Company with retained profit: The company pays 25 per cent tax on its profit. The salary you draw is taxed at your personal marginal rate through PAYG.
- Trust distributions: Each beneficiary pays tax at their own marginal rate. Plan distributions before 30 June to manage the total tax outcome.
Better approach: Open a separate bank account and transfer your estimated tax amount into it each month. When the tax bill arrives, the money is already there. This one habit eliminates the most common small business cash crisis: the EOFY tax bill that was never planned for.
Step 3: Keep a working capital buffer
Before you pay yourself, the business needs enough cash to cover the next one to two months of operating expenses: wages, rent, supplier payments, loan repayments, and upcoming BAS obligations. This is not optional. If you draw too much and the business cannot meet its commitments, you have a serious problem.
Step 4: Pay yourself a consistent amount
Once you know what is genuinely available after tax and working capital, pay yourself that amount consistently each month. Treating owner drawings like an employee salary, with a fixed amount on a regular schedule, does two things: it stops you from spending whatever happens to be in the account, and it gives you a predictable personal income to plan your own finances around.
Step 5: Review it quarterly
Your owner pay is not set and forget. Review it every quarter with your accountant. If profit has grown, increase it. If a major expense is coming, reduce it temporarily. The number should reflect where the business actually is, not where it was 18 months ago.
A worked example: company director in Brisbane
Here is how a Brisbane business owner operating through a company structure might think about their pay for the 2026-27 financial year.
| Item | Amount |
|---|---|
| Company annual revenue | $600,000 |
| Less: operating expenses (staff, rent, materials, etc.) | ($380,000) |
| Gross profit before owner salary and tax | $220,000 |
| Director salary (paid monthly, PAYG withheld) | ($100,000) |
| Remaining company profit before tax | $120,000 |
| Company tax at 25% | ($30,000) |
| After-tax profit available for dividend or reinvestment | $90,000 |
| Franked dividend declared at year end | $60,000 |
| Retained in company for working capital and growth | $30,000 |
| Total owner income (salary + dividend before personal tax) | $160,000 |
In this example the director takes $100,000 in salary throughout the year and receives a $60,000 franked dividend at year end. The franking credits (representing the 25 per cent company tax already paid on the dividend income) offset the personal tax owed on the dividend, reducing the additional tax payable. The remaining $30,000 stays in the company as working capital.
On the salary amount: The $100,000 salary is not arbitrary. It is set to cover the director’s personal living costs and give them super entitlements. The company gets a tax deduction for the salary. The dividend is then used to distribute profit tax-efficiently at year end. This salary-plus-dividend structure is common for growing businesses with stable profit.
What to pay yourself at each stage of business
The right number changes as the business grows. Here is a rough guide by revenue stage. These are benchmarks, not rules.
| Stage | Annual revenue | Typical owner pay | What to watch |
|---|---|---|---|
| Early stage | Under $200k | $40k to $70k | Prioritise business cash flow. Take enough to live on and no more. |
| Growing | $200k to $500k | $70k to $120k | Review quarterly. Structure may need revisiting as profit grows. |
| Established | $500k to $1M | $100k to $160k | Salary-plus-dividend often optimal. Super contributions become important. |
| Scaling | Over $1M | $150k+, model-dependent | Often involves family trust, corporate structure, or both. Model carefully. |
These are rough benchmarks only: Your number depends on your profit margins, cost base, structure, and personal situation. A business doing $500k revenue with 60 per cent gross margins is in a very different position to one doing $500k with 20 per cent margins. Revenue alone does not determine what you can pay yourself.
Do not forget superannuation
Owner super is one of the most overlooked obligations in small business, and one of the most powerful tax tools available.
If you operate through a company and pay yourself a salary
Your company must pay the superannuation guarantee on your salary, currently 12 per cent. This is a legal obligation, not optional. Missing it triggers the Superannuation Guarantee Charge, which includes penalties and is not tax deductible.
From 1 July 2026: Under Payday Super, your company must pay that super at the same time as it pays your salary, and the contribution must be received by your super fund within seven business days of payday. The old quarterly cycle is gone. If you pay yourself monthly, your company now has a monthly super obligation to fund rather than a quarterly one, which changes the working capital you need to hold back.
If you are a sole trader
No one pays super for you. You are responsible for your own retirement savings. You can make concessional (before-tax) contributions up to $32,500 per year in 2026-27 (up from $30,000, following indexation on 1 July 2026) and claim them as a tax deduction, reducing your income tax at your marginal rate while saving at only 15 per cent inside super.
The numbers on this are compelling
For a sole trader on a $150,000 taxable income, a $25,000 concessional super contribution saves approximately $6,000 in income tax compared to taking the same amount as personal income. That is money that would otherwise go to the ATO, redirected into your own retirement.
Practical step: Set up a regular super contribution from your business bank account. Even $1,000 per month adds up to $12,000 per year. At your marginal rate versus 15 per cent inside super, the tax saving over a decade compounds significantly. Your accountant can calculate the optimal amount for your situation.
Signs your owner pay is set at the wrong level
You are probably paying yourself too little if
- You regularly use personal savings or personal credit cards to cover household expenses.
- You have not had a pay increase in more than two years despite the business growing.
- You would earn more doing the same work as an employee somewhere else.
- You feel resentful about the business because it does not seem to be rewarding you.
You are probably paying yourself too much if
- The business regularly struggles to pay suppliers, wages, or the ATO on time.
- Your business loan or overdraft is growing even though revenue is stable.
- You cannot answer the question: what does the business have left after paying me?
- Your accountant has flagged that the business is not retaining enough working capital.
The honest test: If you had to hire someone to do everything you do in the business, what would you have to pay them? That is a reasonable starting point for your salary. If your drawings are significantly below that number for more than two years, you are effectively subsidising the business with your own time. That is not sustainable.
When to review your owner pay
Owner pay is not something you set once and leave. These are the triggers that should prompt a review:
- Your business profit has increased or decreased by more than 20 per cent. The amount the business can afford to pay you changes when the underlying numbers change.
- You are taking on new staff or significant new costs. These reduce the profit available for owner drawings. Adjust your pay before the cash runs short, not after.
- You are approaching year-end, and your taxable income looks significantly different from last year. This is the right time to model whether a super contribution, a different salary, or a change to your dividend makes sense.
- Your business structure has changed. Moving from sole trader to company, or setting up a trust, changes the rules for how you can take money out and what the tax implications are.
- You are about to make a major personal financial decision. Buying a home, taking on a mortgage, or restructuring personal debt all benefit from understanding how your business income will look to a lender.
A note on banks and home loans: If you are applying for a mortgage as a business owner, how you pay yourself matters significantly. Banks assess self-employed income differently from salary income. A CA-qualified accountant can help you structure your pay in a way that presents your income clearly to a lender without changing your underlying tax position.
Frequently Asked Questions:
Straight answers to the owner pay questions we hear most often.
How much should a small business owner pay themselves in Australia?
There is no single right answer. It depends on your business structure, your profit, and what the business can afford after tax, super obligations, and working capital. As a very rough guide: early-stage businesses (under $200,000 revenue) often see owners taking $40,000 to $70,000. Established businesses ($500,000 to $1 million revenue) often see $100,000 to $160,000. But the right number for your business requires modelling your actual profit and obligations, not applying a benchmark.
Can I pay myself a salary from my own business?
It depends on your structure. If you operate as a company, yes: you pay yourself a director’s salary, and the company withholds PAYG tax and pays super on your behalf. The salary is a deduction for the company. If you are a sole trader, you cannot pay yourself a salary in the same way. You take drawings from the business and pay income tax on the profit of the business, regardless of how much you drew.
Is owner's pay a business expense?
For a sole trader, no. Drawings are not a tax deduction. You pay income tax on the business profit before any drawings are considered. For a company director, yes: a salary paid to a director is a deductible expense for the company, reducing the company’s taxable profit. Dividends paid to shareholders are not a deduction for the company.
What is the most tax-effective way to pay myself from a company?
The most common tax-effective approach for a company owner is a combination of a modest salary and a franked dividend. The salary is taxed at your personal marginal rate through PAYG. The dividend is paid from after-tax company profits and carries franking credits representing the 25 per cent company tax already paid, which offset your personal tax on the dividend income. The right combination depends on your income level and personal tax position. Your accountant should model this for you annually before 30 June.
How do I pay myself from a trust?
As the beneficiary of a discretionary trust, you receive distributions from the trust each year. The trustee decides how much to distribute to each beneficiary in a trustee resolution that must be made before 30 June. You pay income tax on the distribution at your personal marginal rate. You do not draw from the trust account directly without a formal resolution.
Should I pay myself super as a business owner?
If you operate through a company and pay yourself a salary, your company is legally required to pay super at 12 per cent, and from 1 July 2026 it must pay that super on each payday rather than quarterly, with the contribution received by your fund within seven business days. If you are a sole trader, no one is required to pay super for you, but making concessional contributions voluntarily is one of the most tax-effective things you can do. Contributions up to $32,500 per year in 2026-27 are taxed at only 15 per cent inside super, compared to your marginal rate of up to 47 per cent on income.
What happens if I take too much money out of my company?
This is usually one of three things. First, timing: the business has revenue on paper but cash has not been collected yet, so the bank account looks smaller than the P&L. Second, tax obligations that are not being set aside are quietly consuming what should be available. Third, growth: a growing business consumes cash to fund new work before it is paid for. If your business is genuinely profitable but cash is always tight, that is a conversation worth having with your accountant. The answer is usually visible in the numbers once someone looks.
My business is profitable but I feel like I can never afford to pay myself more. Why?
Acctivate works best for established businesses in Brisbane, typically generating $500,000 or more in annual revenue, that have outgrown basic compliance-only accounting. The firm specialises in trades, allied health, professional services, and property. If you are a sole trader with straightforward returns and no employees, Acctivate may not be the right fit. If you are a growing business that wants an accountant who knows your numbers and contacts you before you have to ask, it is worth a conversation.
Elle Green, CA
Elle Green is a Chartered Accountant (CAANZ) and Co-Founder of Acctivate Business Accountants, with over a decade of experience supporting small businesses across taxation and cash flow management. Holding a Bachelor of Commerce and a Xero Advisor certification, Elle is known for translating complex financial concepts into clear, practical guidance for business owners.
Not sure what you should be paying yourself?
Acctivate Accountants are CA-qualified business accountants in Brisbane. We work with SME owners to model their pay, structure their drawings tax-effectively, and make sure the business can afford what they are taking out of it. It is a one-conversation fix for most people.
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