As a first-time business owner, how do you exactly make money from your business? 

This is a question that many of my clients ask…

  • Should I pay myself as an employee? 
  • Should I pay myself a salary? Or 
  • Should I just take drawings out of my business? 

But let’s go back to basics first, the number one rule is to ensure that your business and your personal bank accounts are completely separate. Even if you’re a sole trader, I recommend that you ensure that your personal expenses are separate from your business expenses.

Now on to how to pay yourself from your business and the answer really depends on how your business is set up, so let’s deep dive into each type of business structure…


When you’re operating as a sole trader, you are unable to pay yourself wages from the business, instead your personal payments are treated as drawings.

However, even though your payments are treated as drawings, I do suggest that you pay yourself a set amount every week or fortnight as if you were paying yourself wages.

Why? This way you are not just taking money out in dribs and drabs, but rather you commit to your business paying yourself a set amount and then you have a goal to focus on in growing your business income and profits.


If you’re operating as a company or as a trust, you can actually set yourself up as an employee of your business. 

Should you do that? Well, that’s a good question. 

There are a couple of different aspects as to whether or not it is a good idea to pay yourself wages from your business. 

If you’re looking at selling your business, it will be much more valuable if you can show that you are able to pay yourself a set salary from the business on a regular basis. 

When you’re treating yourself as an employee, you must withhold tax from your wages, by doing this you are forced to save for your taxes on a regular basis which can be a blessing in disguise at year-end.

Also when you treat yourself as an employee you are required to pay superannuation for yourself which is a great way to ensure that you are setting aside money for your future. 

Treating yourself as an employee can also benefit you if there are certain Government Grants available for businesses with employees, as we saw during COVID. Many of the grants were only applicable for companies & trusts who had employees and I saw a number of clients miss out as they had not technically been treating themselves as an employee of their businesses.  

Paying wages to yourself from your business can have some downsides, for example having to meet the PAYG Withholding & superannuation payments on a regular basis can impact the cash flow of the business. I often see businesses get behind on these payments and end up in payment plans with the ATO which can negatively impact the businesses borrowing capacity, and become financial stress for the business owners. 

When it comes to withdrawing money from your business especially if you are set up as a company, if you are not treating the payments as wages you may be impacted by the Company Director Loan penalties, this is a complex area of the tax law and one I recommend you review with your accountant.

However you decide to pay yourself from your business it is important to consider all different aspects, if you are uncertain as to what is the best way to pay yourself, make sure you have a discussion with your accountant, bookkeeper, or business financial consultant. 

Phoebe Dray

Hi, I’m Phoebe. and I love business! As a sought-after qualified accountant, I come from a place of experience, with over 15 years of running my own accountancy firm, MGA Accountants, I scaled the business to double the size before successfully selling in 2015. Now I am focusing on what I love, helping Professional and Trade service business owners step up from being the Technician to the true CEO of their business, to create more profit and time freedom to live the life of their dreams.

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