There’s a funny thing that happens when people start businesses. We become multitasking superheroes: the CEO, the admin team, the marketing department, the customer service rep, the janitor, and sometimes the emotional support person… all rolled into one toque-wearing powerhouse.
But when it comes to paying ourselves? Suddenly we turn into shy woodland creatures, timidly nibbling around the edges of our own wallets.
Let’s be honest: if your cat eats better food than you do, we need to talk.
Many entrepreneurs treat owner’s pay as an afterthought. Some don’t pay themselves at all. Others take whatever scraps are leftover, like raccoons rummaging through the business expense bin at midnight.
It’s time to change that.
You need to pay yourself properly—not because it feels luxurious, but because it’s healthy, sustainable, and essential for long-term business growth.
Let’s walk through how to compensate yourself realistically and responsibly, with a mix of humour, practical advice, and just a gentle nudge to stop living like your business is the only one in this relationship.
Why Owners Put Themselves Last (And Why It’s Hurting You)
Business owners have an uncanny ability to prioritize everyone else: employees, suppliers, clients, contractors, even the office plants that somehow keep living. Yet when it comes to owner pay, the conversation usually goes something like:
“I’ll pay myself once revenue stabilizes.”
“I’ll take more after I hire someone.”
“I don’t need much right now.”
“It’s fine. I’ll survive.”
Meanwhile your business is cruising along nicely, and you’re considering which flavour of ramen is the fanciest.
Underpaying yourself leads to real issues:
- Burnout
- Resentment
- Difficulty planning personal finances
- Inability to qualify for loans
- Unrealistic business growth strategies
- Lack of motivation or clarity
Your business needs you to be healthy, financially stable, and able to make grounded long-term decisions. That requires fair compensation—not martyrdom.
What Does “Paying Yourself Properly” Look Like?
Owner’s compensation isn’t one-size-fits-all. It depends on your business structure, revenue, responsibilities, and goals. But here’s the key principle:
Your pay should reflect the role you perform.
If you’re acting as CEO, project manager, operations lead, and chief problem-solver, your compensation should reflect that value—not just whatever happens to be left in the bank.
For many businesses, that means creating a consistent, predictable compensation plan—not random withdrawals, not emergency transfers, and certainly not “living on exposure.”
Salary vs. Dividends: The Great Showdown
When your business structure is a corporation, you have two main ways to pay yourself: salary or dividends.
Both have benefits. Both have drawbacks. And both have caused enough confusion that accountants could write a whole sitcom about it.
Let’s break it down in a way that won’t make you want to lie down in the snow and contemplate life.
Salary: The Predictable Paycheque
Taking a salary means treating yourself like a regular employee. You run payroll. You remit taxes. You contribute to CPP. You get a steady deposit into your bank account.
Pros:
- Regular income (your cat approves)
- Builds RRSP contribution room
- Contributes to CPP (which future-you will appreciate)
- Looks good for lenders and mortgage approvals
- Easier for budgeting
Cons:
- Requires payroll setup
- Must remit taxes regularly
- Less flexibility if income fluctuates
If you need predictable cash flow, salary is your winter jacket: reliable, sturdy, and good for surviving life.
Dividends: The Flexible Payout
Dividends come from the profits of the corporation and don’t require payroll or CPP contributions. Owners often pay themselves dividends at year-end or periodically when profit allows.
Pros:
- Flexible
- Potentially lower taxes depending on your income level
- No payroll setup needed
Cons:
- Doesn’t create RRSP room
- No CPP contributions
- Income is irregular
- Harder to plan personal finances
- Can cause tax surprises if not calculated properly
Dividends are like wearing a hoodie in January—comfortable, flexible, and great until the wind hits and you suddenly regret your choices.
The Sweet Spot: A Blend of Both
Many small business owners benefit from a combination of salary and dividends.
This strategy:
- Maximizes tax efficiency
- Balances predictability with flexibility
- Supports personal financial planning
- Reduces tax burden sustainably
It’s the financial version of layering your winter clothes: smart, protective, and adaptable.
How Much Should You Actually Pay Yourself?
Right now, you might be thinking, “Okay, but what’s the magic number?”
There isn’t one single perfect formula, but here’s how to determine a healthy amount:
1. Start with your personal cost of living.
Mortgage or rent, groceries, utilities, transportation, childcare, savings—you need to know your baseline.
2. Add taxes and retirement savings.
Yes, even entrepreneurs should retire someday. Preferably before age 97.
3. Compare your role to market salaries.
If someone else replaced you, what would you pay them?
4. Check your business can sustain it.
This is where your financial reports matter. A profitable business should be able to support its owner.
5. Build owner pay into your pricing.
If your prices don’t cover your compensation, your business is subsidizing itself with your sacrifice. That’s a hard no.
Paying yourself fairly is not indulgent—it’s responsible.
What Happens When You Don’t Pay Yourself Enough
Underpaying yourself leads to some predictable outcomes, none of them glamorous:
- Constant cash-flow stress
- Using personal funds for business expenses
- Falling behind on personal savings
- Feeling resentful of your own company
- Struggling to separate business and personal finances
- Making reactive decisions instead of strategic ones
It’s hard to think like a CEO when you’re living financially like a college student.
What Happens When You DO Pay Yourself Properly
Magic begins.
You gain:
- Financial clarity
- Confidence in pricing
- Predictable personal cash flow
- Stability
- Motivation
- Stronger business boundaries
- A happier household (including that well-fed cat)
It’s transformative for both your business and your personal life.
Your Bookkeeper’s Role (AKA Your Financial Reality Check)
A good bookkeeper helps you:
- Understand your business’s financial capacity
- Track profit accurately
- Forecast cash flow
- Determine a sustainable owner pay strategy
- Work with your accountant to optimize salary vs. dividends
- Create systems that support consistent compensation
If you’re unsure where to start, that’s exactly why I’m here—to help bring clarity to a topic that confuses even seasoned entrepreneurs.
It’s Time to Move Yourself Up the Priority List
You are not the intern.
You are not the backup plan.
You are the heart and engine of the business.
Pay yourself like it.
And if your cat is still eating premium organic wild-caught salmon while you’re eating stale granola bars from your glove compartment… call me.
It’s time for your compensation glow-up.
