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LearnFAQSelf-Employed & Small Business

How do I build a reliable 'salary' out of my business income?

Answer

Building a salary means converting unpredictable revenue into a steady personal paycheck, which is the foundation of financial stability when self-employed. Start by separating business and personal accounts. Let all revenue land in the business account, then determine a sustainable monthly draw by looking at your average net income over the past year and choosing a figure the business can cover even in below-average months. Pay that fixed amount to yourself on a regular schedule — mimicking a real payroll — and let surplus build a buffer that funds the draw during lean stretches. Set aside taxes and retirement before calculating what's left for your salary, so the figure is genuinely sustainable. As the buffer grows and income proves reliably higher, give yourself a raise. The discipline of a fixed draw, rather than spending whatever's in the account, is what makes personal budgeting and saving finally work.

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