As a business owner, you’ve worked hard to build something incredible—but are you paying yourself what you’re truly worth? Paying yourself more isn’t just a reward; it’s a way to create a sustainable, thriving business and give yourself the financial freedom you deserve. Let’s walk through a framework to help you increase your income while making sure your business stays strong and profitable.

Step 1: Why Paying Yourself More is Smart Business

Paying yourself well is part of a solid business strategy. Giving yourself a regular, maintainable paycheck builds financial security for you and helps clarify your business’s actual performance. Not only does this make it easier to make smart decisions for growth, it also motivates you to stay focused on long-term success. Consider it an investment in yourself and your business—valuing yourself is a powerful driver of sustainable growth.

Step 2: Know Your Roles and Maximize Your Paycheck

As the CEO, you’re managing two roles, and both can lead to increased pay:

• The Operator Role: This role involves the day-to-day running of your business. The operator role should receive a “reasonable compensation”—basically, a salary for the work you’re doing. This is what you would pay someone else if you weren’t in the role.
• The Owner Role: Here, you’re the business owner and decision-maker. This role earns profit distributions above your salary, so as your business profits increase, so does your opportunity for extra income.

If you’re an S-Corp owner, the IRS requires you to pay yourself a reasonable salary. LLCs have more flexibility, but a regular paycheck helps establish the habit of paying yourself as the CEO and gives you a clear understanding of your business’s profitability.

Step 3: Use This Framework to Pay Yourself More

Here’s a step-by-step guide to help you consistently increase your pay over time.

1. Choose the Right Method

Start by deciding on the best approach for you: either the “reasonable compensation” method, which is required for S-Corps, or the “Rule of Averages”. The Rule of Averages involves looking at your cash balances, monthly debt payments, and average profits over the last year to determine how much you can safely take home.

• Build Your Business Savings Plan

Creating a financial cushion allows you to increase your pay while protecting your business:

1. Operating Expenses: Save at least three months’ worth of operating expenses for security.
   1. Tax Savings: Set aside funds in a dedicated tax account for quarterly and annual payments.
   1. Future Investments: Keep a third account for growth opportunities so your business (and paycheck) can keep expanding.
2. Increase Profits and Grow Your Paycheck

Ready for a raise? Here are three ways to improve profits so you can pay yourself more:

1. 1% Adjustments: Make small changes in pricing or billing practices that add up over time without shocking your customers.
   1. Expense Grading: Evaluate every expense as A, B, or C. Eliminate low-value expenses to free up more cash.
   1. Stay Consistent: Consistency is a powerful profit-builder. By sticking to your core offerings, you build trust with clients and attract more referrals, leading to steady growth.

Danielle Hayden and Kickstart Accounting Inc. have helped thousands of entrepreneurs maximize their income and build financial stability. Want to start paying yourself more? Click HERE to download a worksheet that will guide you through each step. Start today and unlock your full earning potential!