# How do I pay myself from my small business?

It depends on how the business is set up. A sole proprietor usually takes an owner's draw, a transfer from the business account to a personal one, and pays tax on the business's net profit, not on the draw; IRS Publication 334 (2025) says you can't deduct your own salary or personal withdrawals. Corporation officers, including S corporation shareholder-employees, are generally paid wages. A ProfitDrawer bookkeeping spreadsheet keeps owner draws out of profit and tax.

By structure:

- **Sole proprietor:** take draws as needed. You are not an employee of the business, so there is no paycheck or W-2. Income tax and self-employment tax are figured on net profit, usually paid through estimated taxes if you expect to owe $1,000 or more.
- **Partnership:** partners are not employees and should not get a Form W-2 for distributions or guaranteed payments.
- **S corporation:** a shareholder who works in the business should receive a reasonable salary through payroll before taking distributions.
- **C corporation:** officers are generally employees paid wages; distributions from earnings are generally dividends.

A practical routine for draws:

1. Move your tax set-aside to savings first.
2. Keep a cash cushion for upcoming bills.
3. Pay yourself a fixed amount on a set day each month, and record it as an owner draw, not an expense.

General information, not tax advice.

- Source: [IRS Publication 334 (2025), Tax Guide for Small Business](https://www.irs.gov/publications/p334)
- Updated: 2026-10-29
- Published: 2026-10-29
- Category: Pricing and profit
- Canonical: https://profitdrawer.com/answers/how-do-i-pay-myself-from-my-small-business.html
- Publisher: ProfitDrawer (https://profitdrawer.com)