How Much Should You Pay Yourself as a Sole Proprietor?
1 min read
How Much Should You Pay Yourself as a Sole Proprietor?
If you are a sole proprietor, figuring out your salary can feel like a guessing game. Here is a simple, four-step rule of thumb to determine exactly how much to pay yourself:
1. Calculate your net profit: Find the final number at the very bottom of your Profit and Loss (P&L) statement.
2. Set aside small business taxes: Ask your accountant for your exact rate. It usually falls between 20% and 35% of your net income. Always oversave rather than underprepare.
3. Reserve business reinvestment funds: Decide what percentage of net income your business needs to grow.
4. Take an owner's draw: Use the remaining percentage to pay yourself.
The 50/30/20 Rule for Sole Proprietorship Pay
If you need a starting point for your business budget, try allocating 50% for your salary, 30% for taxes, and 20% for business reinvestment. You can always adjust these numbers as your revenue and business needs evolve.
Take the Guesswork Out of Your Business Finances
Managing cash flow while running a busy practice can be overwhelming. At Fauna Accounting, we specialize in accounting for veterinary and equine industry entrepreneurs.
Schedule your free consultation today!
Overwhelmed to Empowered
Empowering Veterinarians and Equestrians with Tailored Accounting Services.
Care
Trust
info@faunacounting.com
508-545-7444
© 2026. All rights reserved.