The Real Reason Service Providers Struggle to Pay Themselves Well (And How to Fix It in 2026)

Small Business FinanceBookkeeping TipsTax StrategyProfit & Pay

Jan 23

If one of your goals this year is to finally pay yourself more (consistently and confidently) you’re not alone. Every service provider wants to know what it takes to earn a healthy income without the stress and guesswork.

The truth? You can pay yourself 50% of your revenue a year selling almost any service… when your business is structured the right way. And that structure starts with accurate bookkeeping, clean data, and a financial system you can trust.

Whether you’re hoping to stabilize your owner pay, reduce your taxes, or stop wondering where your cash is actually going, these three fundamentals from the Better Bookkeeping system will help you build a stronger, more profitable 2026.

1. The Simple Math Behind Paying Yourself More

Most business owners underestimate how much clarity their numbers can provide. When your books are current and accurate, you can plan your pay with confidence, not hope.

Here’s the straightforward framework for a business earning $300,000 a year:

Revenue: $300,000
Owner pay: $150,000
Expenses: $112,500
Taxes: $37,500

Month by month, that breaks down to:

$25,000 revenue
$12,500 in owner pay
$9,375 in expenses
$3,125 toward taxes

This isn’t magic, it’s math. And it becomes achievable when your bookkeeping shows you real, accurate data every month.

But when your books aren’t clean, everything becomes distorted:

“Profit” looks better than it is because unpaid bills aren’t recorded
Tax estimates can be off by thousands
And owner pay becomes a wish, not a plan

At People First Finance, every client receives a personalized financial summary that tells them:

What they actually earn and spend
What they can safely pay themselves
Whether their margins are healthy
How much to set aside for taxes
Where they can improve profit

Clarity is what makes your goals achievable. Clean numbers make clarity possible.

2. The Innocent Bookkeeping Mistakes That Quietly Cost You Thousands

Most small business owners think their bookkeeping is “fine.” And it might look fine.. until a professional review reveals hidden mistakes that snowball into real financial losses.

In a recent client file, the following three errors cost the owner more than $4,000 in missed deductions:

Only the down payment on a piece of equipment was recorded - the liability and depreciation were never added
Business loan interest wasn’t tracked for months
Several deductible expenses were incorrectly coded as “owner draws”

None of these mistakes were intentional. But every single one had tax consequences. When your bookkeeping isn’t accurate, your tax return isn’t accurate, and that’s where money gets lost.

This is why every new Better Bookkeeping client starts with a review, where our team checks that:

Every expense is categorized correctly
Every asset and loan is properly recorded
Every dollar is tracked the way the IRS expects

If your books haven’t been reviewed in the last 12 months, now is the ideal time.

There is money hiding in your numbers, but you only find it when your books are done right.

3. Why DIY Bookkeeping Fails When Payroll Enters the Picture

If you run payroll (even for yourself) the stakes become much higher. Payroll mistakes are notorious for being quiet, easy to miss, and expensive to fix.

We recently discovered a payroll error where QuickBooks was showing payments as “paid,” even though the IRS hadn’t received what it was owed. The cause? The payroll tax holding account was mapped incorrectly. The result? Nearly $3,500 in penalties and interest, all completely avoidable.

These errors happen even with experienced bookkeepers. It’s not about competence, it’s about oversight.

With Better Bookkeeping, your books aren’t handled by one person. You get a mixed team of:

Bookkeepers
Tax professionals
Advisors

All reviewing and checking one another’s work to make sure errors are caught immediately, not discovered during an IRS notice or a stressful tax season.

Every new client engagement includes a review of their year to date financials.

It’s the fastest way to: