How much should you pay yourself: the owner's salary in an SMB

Many small business owners don't pay themselves a salary. They pull money out "whenever there's some" for personal expenses, mix it with the company's cash, and at the end of the month nobody knows whether the business actually turned a profit or just financed their life out of the register. The problem isn't just disorganization: if your own work has no clear cost attached to it, your profitability numbers are inflated, and you're the one being fooled.

Why you need a fixed salary, not "whatever's left over"

If you don't pay yourself a salary, your business looks more profitable than it really is. You're absorbing a cost — your time and work — without ever recording it. That has two practical consequences:

• You can't compare your business to a similar one, because your cost structure is incomplete.
• The day you hire someone to do what you currently do, you'll find out that position costs more than you thought, and the margin you believed you had disappears.

Giving yourself a salary — even a modest one at first — forces you to see the business as it actually is.

How to calculate a reasonable number

There's no single formula, but these three steps help you land on a reasonable starting point:

1. Research the market salary for the role you're performing. If you were the general manager, sales lead, or accountant at a similar company, how much would they pay you? That's your reference point, not a number you make up.
2. Adjust it to what the business can actually support today. If the company is barely covering fixed costs, start with a salary below market rate, but define it as a fixed, consistent figure — not as cash left over at the end of the month.
3. Review that number every 6 to 12 months, as the business grows, and adjust it the same way you'd adjust the salary of any other key role.

The point isn't landing on the perfect number the first time. It's stopping the use of "whatever's left" as a method.

Separate your personal account from the company's

This sounds obvious, but it's one of the hardest habits to build. If your salary and the business's expenses come out of the same account, it's impossible to see clearly:

• How much it really costs to run the business each month.
• Whether fixed costs are growing faster than sales.
• Whether your salary — once it's fixed — is being paid on time, like any other commitment the company has.

A separate account for the business, with your salary going out as a fixed, recurring transfer, is the first step toward treating your work as the cost it actually is.

What to do if the business can't afford what your work is worth

This is common, especially in the early years. If the market number is higher than what the business can sustain, don't ignore it: record it as a visible gap, not as a salary that simply doesn't exist. This gives you valuable information:

• If the gap is large and persistent, it may be a sign that pricing is off, or that fixed costs are eating more margin than they should.
• If the gap shrinks over time, that's a good signal that the business's real profitability is improving.

In general, every case has its own particularities — business size, sector, legal structure — so it's worth reviewing yours with your accountant or financial advisor before settling on a final figure.

The owner's salary is just another fixed cost

Once you set your salary, treat it the same way you treat rent or payroll: it's a fixed cost that has to be covered every month, no exceptions. Having visibility over all your fixed costs — including your own — in one place is what lets you know, with real numbers, whether the business is profitable or just running on appearances.

With Miscostosfijos you can organize and track all your fixed costs, including your own salary, to make decisions based on real information instead of the feeling that "this month there was cash." Try it free for 7 days and start seeing your business with the full picture.