Your business made money last year, but are you paying yourself?

I want to ask you something I ask almost every client at some point: “How much did you pay yourself last year?”

The pause that follows that question tells me everything.

Some people laugh nervously. Some people pull up a spreadsheet. And some quietly admit they have no idea, because they’re reinvesting everything, paying their team, covering expenses, and somewhere in that shuffle, their own salary has become optional.

If that’s you, let me tell you something – without any judgment – it’s no reward to pay yourself when the going gets easy. It is a fundamental part of running a financially healthy business.

I remember sitting with a client who ran a digital marketing agency during a coaching session, taking him line by line information about his financial situation. When I asked her how much she was paying herself, she fell silent and said, “Whatever was left was nothing in most months.”

So we investigated. We figured out where everything was going, subcontractors, software, operating costs, and what we found was that she was undervaluing her services from the beginning. And because the scope of his proposals was not limited, every project came with additional deliverables, additional revisions, additional hours that he had not planned for. By the time everything else was covered, there was nothing left for him.

What impressed me most was the embarrassment she felt about it. Because she wasn’t failing her clients, she was helping them launch massive launches and deliver big results, and she was working relentlessly. She was failing because she wasn’t paying herself while doing it.

It is more common than people admit. Many business owners have a deep devotion to service, and because of this, they prioritize everyone else’s financial needs before their own. It’s not always a mindset issue. Sometimes it happens that no one ever showed them how to build their salary into the structure of the business. That’s what tax season is for, not just to settle with the IRS, but to actually look at where your money went and honestly ask: Did I make it on that list?

my ebook A Business Owner’s Guide to Optimizing Tax Deductions This includes deduction checklists, documentation requirements, and advanced tax strategies. Get the e-book and start keeping more of what you earn.

Profit on paper is not equal to money in your pocket

You can have a profitable business and a personal bank account that feels completely empty. The gap between what the business generates and what actually reaches you is one of the most common and damaging patterns I see. Tax season becomes impossible to ignore, because suddenly you’re looking at an entire year’s worth of data and asking yourself, “Where did it all go?”

How you pay yourself depends on your business structure:

• sole proprietor and single member llc Pay yourself through Owner Draw, which transfers funds from the business account to your personal account.
• S-Corp owner They are required to pay a fair salary by withholding taxes through payroll, and can then take additional distributions on top of that.

Either way, you are not exempt from taxes. How taxes are paid may look different, but the obligation remains the same.

reinvestment trap

There is a version of financial discipline that looks responsible but is actually a destructive, slow leak. Every time there is money in the account, there is a need for something “more important”. You feel the need for another certification, a new appointment, photos for the upcoming campaign launch. Your own salary keeps getting postponed.

I want you to clearly understand that your personal financial stability is a business decision. When you’re not paying yourself consistently, you create stress in your life that has a direct impact on running your business. You start making decisions from scarcity rather than strategy.

Paying yourself should be part of the structure of your business.

Most people determine their value by adding up their expenses and hoping that they will have something left over. I want you to reverse it. Decide how much you really need to pay yourself – not someday, not eventually, but right now – and let that number base your entire business model. From there, you layer in what you need to set aside for taxes, what your operating expenses actually cost, and what the rates you charge make sense. This will inform you how much you need your gross revenue to be.

When you structure your business finances in that order, your salary stops being the last line item and starts becoming the foundation for the value of everything else. This is not a luxury you will earn later. This has been the structure since day one.

Before you close your books this year

Ask yourself honestly:

• Did I pay myself consistently, intentionally, or whatever was left over?
• Is my personal income reflected in my real financial picture, or am I running on empty while the business looks fine on paper?
• Do I know how much self-employment tax I owe, and do I have enough set aside to cover it?

These questions are not meant to make you feel behind. They’re meant to help you enter the new tax year with a plan that will work for both your business and personal finances.

TurboTax Expert for Business Help you clearly see your business income, identify deductible expenses, and understand what you actually owe – so you’re not guessing, and you’re not leaving money on the table. Your business made money. Make sure you do the same.

A Business Owner’s Guide to Optimizing Tax Deductions Tells you exactly which business expenses are deductible, how to calculate them, and what documentation you’ll need to support your claims. Get the e-book and start keeping more of what you earn.