By Palesa Mabasa, Business Development Head at FNB
20 January 2026 – Running your own business can be exciting, but figuring out how — and how much — to pay yourself is often tough, especially in the early stages.
It’s important to find the right balance between rewarding yourself and ensuring your business remains financially healthy. The first step is understanding the minimum amount you need to cover your personal living expenses. This is critical, particularly when the business is your sole source of income, as it helps ensure that business revenue can sustainably support you.
From Side Hustle to Main Income
For many entrepreneurs, the journey to full-time self-employment begins with a side hustle that eventually becomes a primary source of income. Once that happens, it may feel natural to start paying yourself a full salary.
Take the example of an events business owner. Securing a major contract can be exciting, and the temptation to take a large payout is understandable. However, keeping your salary modest and reinvesting most of the income back into the business can position you better for future opportunities. Having savings in the business allows you to take on bigger projects without scrambling for funding.
Why Business Savings Matter
Savings play a critical role in business sustainability. They help cover operating costs, cushion slow periods, and create room for growth. Banks and investors also favour businesses that demonstrate disciplined financial management rather than those that spend all their income immediately.
Reinvesting in your business shows commitment and strengthens its long-term prospects.
Having reserves allows you to:
- Manage low and peak business cycles more effectively
- Invest in new systems, tools, or technology
- Improve access to funding, as lenders favour stable cash flow and healthy balance sheets
Separate Business and Personal Finances
Keeping business and personal finances separate is essential. Purchasing equipment or vehicles for business operations makes sense, but using business funds for personal expenses does not.
Pay yourself a structured amount that meets your needs, but avoid dipping into business funds for non-essential personal spending.
How Much Should You Pay Yourself?
Many entrepreneurs do not pay themselves at all in the early stages, relying on savings or family support. As income stabilises, a general guideline is to pay yourself between 2% and 20% of business revenue, depending on:
- The type of business
- Existing debt
- Cash flow stability
In some cases, it may be wiser to prioritise debt repayment rather than increasing personal income.
Understand the Tax Implications
Whether you draw a salary or pay yourself from profits, it’s important to understand the tax consequences. If you have business partners, agree on compensation structures in advance and formalise them in writing to avoid misunderstandings.
Plan Your Pay Strategically
Paying yourself should form part of your overall business strategy — not just what’s left at month-end. Paying yourself too little can lead to burnout, while paying too much can strain the business.
The best approach is balance: earn enough to live sustainably, while ensuring the business has sufficient reserves to grow and seize future opportunities.
With discipline, planning, and consistency, paying yourself wisely can strengthen both your personal finances and the long-term success of your business.
