How do I pay myself as a new business owner?

Most new sole proprietors and single-member LLC owners pay themselves with an owner draw, not a paycheck. That means you transfer money from the business account to your personal account when the business can afford it. The transfer is not usually a business expense, and it does not erase your tax responsibility. You are typically taxed on the business profit, not only on the money you move to yourself. If your business is taxed as an S corp, has multiple owners, or has employees, the rules can be different, so get tax help before setting up payroll for yourself.

Steps

1. Separate the money first. Use a business bank account if you have one. If you are still using a personal account, start tracking business income and expenses clearly.

2. Pay business costs before paying yourself. Leave enough money for supplies, software, refunds, fees, insurance, and upcoming bills.

3. Set aside money for taxes. Move a portion of profit into a separate savings account for income tax and self-employment tax. Your exact amount depends on your profit, state, and other income.

4. Transfer your draw. Move money from the business account to your personal account. Label it as “owner draw” or “owner distribution” in your records.

5. Do not categorize your draw as a wage expense. For most sole proprietors and single-member LLCs, paying yourself is not the same as paying an employee.

6. Keep a simple monthly rhythm. Review income, expenses, tax savings, and cash needs before taking money out.

7. Ask for help if your setup changes. If you elect S corp taxation, add partners, hire employees, or take regular payroll, a CPA or payroll provider can help you avoid mistakes.

If you are still stuck

If you are not sure whether a transfer should be marked as owner draw, payroll, reimbursement, or something else, open your Stratify roadmap and check your money setup tasks. You can also ask the AI coach what type of business you have and how you are currently paying yourself.