How to Pay Yourself the Right Way as a Service Business Owner
Is Your Paycheck Costing You Thousands? A Smarter Way to Pay Yourself as a Service Business Owner
“You’re paying yourself money that isn’t really yours.”
It’s a bold statement, but it’s the truth for many service business owners. When you don’t have accurate, up-to-date books guiding how much you can safely pay yourself, you’re either:
Overpaying and losing thousands in unnecessary payroll taxes, or
Underpaying and constantly scrambling in your personal life while leaving money on the table.
Professional bookkeeping isn’t just about organizing transactions. It’s about protecting your paycheck, keeping you compliant, and ensuring you keep more of what you earn. Let’s dig into how.
Why Most Owners Get Pay Wrong
Many business owners under $1M make the same mistakes when it comes to paying themselves:
Guessing their salary. If cash is in the account, they transfer it. If not, they go without.
Ignoring tax savings. Instead of setting aside money every month, they wait until tax season and hope for the best.
Forgetting compliance rules. S Corp owners, for example, need a “reasonable salary” to stay compliant with IRS guidelines.
Without accurate financial data, these mistakes compound quickly. What feels like a “paycheck” today could turn into an IRS penalty, a surprise tax bill, or an expensive audit later.
What Professional Bookkeeping Gives You
When your books are accurate, your Tax Accountant can design a tax-advantaged compensation strategy. That means balancing salary and distributions in a way that saves you money, keeps you compliant, and gives you peace of mind.
With Better Bookkeeping, clients see:
Thousands saved in payroll taxes every year
Clarity on how much is safe to take home each month
Confidence in their compliance with IRS rules
Professional bookkeeping should pay for itself. Done right, it does exactly that.
Your Business Needs More Than Bookkeeping
Here’s the thing: you don’t just need reports. You need to know what those reports mean for you, your pay, and your future goals.
That’s why our monthly financial summaries go beyond numbers on a page. With Better Bookkeeping, you’ll know:
How much to save for taxes
How much revenue your business actually kept (not just earned)
How much you should have in business savings
Where you stand against your goals
Personalized strategies to improve your financial position
This is financial guidance for service providers who don’t have a CFO but still need expert oversight.
Even if you think, “it’s just me” or “I don’t have that many transactions,” the reality is you don’t know what you don’t know. And missing small details can cost you big.
How Much Should You Really Pay Yourself?
If you’re making between $10K–$15K per month, here are simple benchmarks that keep you grounded:
Service delivery costs: No more than $3,000–$4,500 (30% of revenue)
Overhead & coaching: $2,000–$3,000 (20% of revenue)
Taxes: 20–25% of net profit set aside every month
Owner pay: $6,750–$10,125 (if you’re the only one delivering services)
These are not just numbers. They’re the foundation for paying yourself sustainably while keeping your business healthy.
If your revenue fluctuates, apply these percentages to your annual totals. You’ll get a clearer picture of what you can afford to pay yourself without draining your business or creating a tax nightmare.
Stop Guessing. Start Keeping More.
Paying yourself isn’t just a financial decision. It’s a business survival strategy. Done wrong, it costs you thousands. Done right, it helps you grow with confidence.
Better Bookkeeping makes this simple. We track every dollar, flag opportunities to save, and give you the clarity you need to pay yourself correctly - every single month.
Now is the time to get this right, especially as tax planning season approaches.
👉 Book your call today and see how much more you could be taking home this year.
