As a sole proprietor, how much can I pay myself?

If you're a sole proprietor, here's a general rule of thumb to determine how much to pay yourself: ONE: Determine your net profit. This is the number at the very bottom of your P&L. TWO: Find out from your accountant how much you need to save for taxes. This is generally somewhere between 20-35% of your net income. Oversaving is better than being underprepared when it comes to your taxes. THREE: Determine what percentage of your net income you want to leave in your business to reinvest. FOUR: Use the remaining percentage to pay yourself! Most often, I see 30% for taxes, 20% for reinvestment, and 50% for yourself recommended as a great starting point. You can always adjust what you're paying yourself depending on your income and business needs!

Laurel Foster

5/8/20241 min read