How Much Should You Pay Yourself?

She pays herself $9,000 a month and thinks she's being conservative. She's $16,500 short at tax time, and she didn't overspend a dime. I'm Ralph Estep Jr., The Content Creator's Accountant. In this episode, I work through one business and one year of math so you can figure your owner pay in the right order. The order is tax, debt, reserve, and then you. Year-End Business Review: contentcreatorsaccountant.com/review What you'll hear: Why an owner draw never lowers your taxable profit How a $120,000 profit turns into about $28,500 in federal tax Why the same owner can safely take about $6,600 a month instead of $9,000 Why "just set aside 25%" can be wrong for you A four-number check you can run this week Mentioned in this episode: Profit First by Michael Michalowicz Simple Numbers, Straight Talk, Big Profits by Greg Crabtree This is general information, not advice for your specific return. Have a question for me? Send it in, and follow the show so you catch next week's episode on S corporations.