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How to pay yourself as a business owner in Australia

Are you an up and coming entrepreneur in Australia? If so, you’ll want to make sure that you’re setting yourself up for long-term financial success. One of the most important steps in this process is learning how to pay yourself – in other words, how to draw a salary as an owner of your own business.

Setting up a payment schedule for yourself can seem intimidating at first and you may be wondering where to start, especially to ensure you’re covering matters from super contributions to personal expenses. This article will walk you through the process so you can confidently put together a system that is sustainable for your business while meeting your personal financial needs.

Develop your payment system

As a business owner in Australia, it’s important to develop your own payment system in order to pay yourself properly. Understanding this and what taxes and deductions apply is fundamental to any successful business.

You’ll first need to make sure that you’re tracking all income and expenses that your business receives and pays for. Services like Xero and MYOB allow you to implement effective bookkeeping which can help you to ensure that everything is kept up to date and that people are paid on time. In addition, these services allow you to keep track of your profits and losses as a business, making life all the more easier come tax time.

Once you have developed a system for tracking payments, it’s time to set up your payroll scheme. This can vary depending on the type of business you are operating.

How to pay yourself as a sole trader or partnership

If you’re a sole trader, then you’ll be able to pay yourself via the profits that are generated from your business revenue. Your payment system should help to determine how much revenue has come in, and then from that, how much profit is left after all business expenses have been paid.

You’ll also need to keep in mind that come tax time, you may be required to pay tax so be sure to track your profits you withdraw for yourself and save a portion of that for the end of the financial year. For specifics, be sure to speak with your accountant.

How to pay yourself as a company

As an owner of a company, you’ll likely be needing to pay yourself a salary just like you would pay any employee, showing up as an expense on the company books. As such, you would receive a payslip that indicates both your gross and net payments, followed by your personal income tax.

how to pay yourself as a business owner in australia

Depending on where you are in your business venture, if you are (or if you are considering) hiring staff, you may also need to consider leave entitlements you will offer staff members and set up electronic banking systems for direct deposits. By following these steps, you can create a streamlined payment structure for yourself and all other employees in your business.

Understand your employer and employee obligations

The next step in developing this system is understanding the different payment methods and obligations available in Australia. The right option for your business will depend on the type of services you offer and the amount of money you need to move around every month for your business expenses.

The next step is setting up a business plan budget to ensure that you’re getting paid a fair wage and enough money to cover operational costs and improve business growth/scalability. Keep track of how much profit your company generates each month so that you can set realistic expectations when devising how much of it will go into your own regular salary.

Finally, decide exactly when payments should be made and stick with it – setting up automatic transfers with digital banking can make this process smoother, as well as help avoid late payments or any other financial inconveniences.

How much should you pay yourself as a business owner?

The answer to this question can largely depend on your personal circumstances and the nature of your business, however it is first important to ensure that you understand the ins and outs of your own personal budget.

If you’re a sole trader just getting started, your first goal may be to earn enough in order to work on the business full-time. Asking yourself whether you can afford to quit your job is a question that’s much easier to answer if you have a budget that outlines all of your expenses over the upcoming 12 months. You can get started on this by downloading our personal budget template.

Depending on the cash flow of your business, once you have reviewed your business’s profit and loss and financial history, you’ll then need to work out whether your business is able to afford the wage that’s needed to keep your personal budget sustainable. Remember, wages are a business expense.

If you’re struggling to make this new expense fit into your business budget, consider reviewing your business expenses, or even the pricing for your products/services. However, you may need to be mindful of factors that go beyond your personal needs, ensuring you don’t make a decision that could harm your business in the long run.

Understand your tax obligations

As a business owner in Australia, it is essential that you understand your tax obligations. Not only will this help you avoid costly fines and penalties from the Australian Taxation Office (ATO), but it can also help save you money in the long run.

Therefore, make sure to familiarise yourself with all local, state and federal tax regulations so that you know how to pay yourself as a business owner in Australia.

For a quick guide on rough ballpark figures, you can do some quick calculations on This website allows you to track a wide range of factors, including superannuation, tax distribution, student loan repayments, etc.

It can also be helpful to consult an accountant to better understand your business’s finances and tax obligations. This ensures that you are up-to-date on any changes to laws and regulations that might impact your business.

Additionally, make sure to keep accurate records of any income or expenditure on behalf of the business. Recording these numbers accurately helps simplify the process of filing taxes each year.

Consider superannuation contributions

If you’re an Australian business owner looking for a way to pay yourself, you may need to consider making super contributions to your own superannuation fund. This type of retirement savings plan is designed to provide your future self with the funds necessary for a comfortable retirement.

Superannuation is a way to save for your retirement and build wealth in the long term. If you’re looking to pay yourself from your business income, in addition to tax obligations, you may need to also make super contributions in order to ensure this continues to accumulate throughout your working life.

If you’re unsure how to ensure you’re making super contributions correctly, consider contacting your accountant to discuss this further.

Seek professional financial advice

We’ve mentioned this a few times throughout this article, but as a business owner in Australia, we must stress that it is important to seek professional financial advice when it comes to paying yourself, no matter what type of company owner you are, from sole trader to managing and maintaining a large company structure. This will ensure that you are managing your money correctly and avoiding any major pitfalls that could put you at risk of incurring unnecessary financial penalties.

A qualified accountant can advise you on the most suitable structure for self-employment and provide guidance on how best to pay yourself, such as taking out wages, declaring dividends or transferring profits into a company pension or personal savings plans.

When considering how much you should pay yourself with a formal wage each month or year, they may be able to recommend an amount based on your business cash flow and estimated future income.

They may also advise further on effective methods of tax minimisation, handling day-to-day expenses, deciding which accounts to open in the company’s name, setting up insurance payments and more. With their help, you can make sure you are taking home all the money that is due to you as well as ensuring the correct amount of company money for your business journey and meeting all legal requirements for taxation.

According to Inline Partners, a staggering 60% of businesses in Australia will fail within their first three years, and of those who fail, 50% are profitable. Therefore, to do your best not to contribute negatively to this statistic, seeking professional advice to manage your business funds and taxation may be the answer you’re needing.

Find an appropriate accounting software or app

As previously alluded to, one of the most important steps when setting up a business in Australia is to find an appropriate accounting software or app. This will help you automate the process of tracking your income and expenses, as well as filing tax returns and reporting to the ATO.

Having a comprehensive financial management system in place also helps business owners to constantly monitor cash flow, pay themselves regularly and ensure that all their taxes are paid on time. It may even make budgeting for new projects easier by providing data for forecasting and more accurate forecasting.

When considering which software or app to use, it’s important to look for a solution that matches your business needs. Some solutions offer basic functions such as invoicing, tracking expenses and recording deposits whilst others include powerful tax planning and cash flow modelling features. There are some pre-existing services that offer these kinds of options for small businesses, with common examples being Xero and MYOB.

But before signing up for a service, be sure to take some time to research different options available so you can find the best one to meet your specific requirements. With an appropriate business or accounting software, you will be well-prepared to properly manage your finances and pay yourself accordingly.

Budget carefully to maximise future rewards

As a business owner in Australia, budgeting carefully is an important step for maximising future rewards. Careful budgeting helps to ensure you’re minimising expenses and setting yourself up for the best returns when it comes time to pay yourself.

Creating a budget that works is essential for any business in Australia. Start by evaluating your current expenses and income, then break down what can be put aside each month.

Once you’ve identified how much money needs to go towards taxes and other expenses, determine what can go into savings or profit payment accounts. Ideally, set aside at least one-third of your net profits each month as a way of investing in the future of your company.

Making sure there are funds available to draw on when it comes time to pay yourself is key – having saved consistently prior will make this easier when it comes to crunch time!

Setting up weekly or monthly transfers will help automate the process, too. Be patient but persistent – taking care of your financial resources now will provide invaluable rewards down the line. This is where MyBudget can help!

MyBudget has helped over 130,000 Australians live their lives free from money worries. To get started, contact us on 1300 300 922 or enquire online today.

This article has been prepared for information purposes only, and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information in this article you should consider the appropriateness of the information having regard to your objectives, financial situation and needs.