How Much Should I Pay Myself From My LLC? (A Simple Rule)

Pay yourself a fixed monthly amount from your LLC based on what the business has actually cleared over the last three to six months, after you set aside 25% to 30% for taxes and keep a cash cushion in the business. Then revisit the number once a quarter instead of taking whatever's left each month.

Quick Answer: Average your LLC's monthly profit over the last three to six months, take out 25% to 30% for taxes, and hold back about 10% until the business has two to three months of expenses saved. Pay yourself a steady amount a little under what remains, then true it up quarterly with a bonus or a raise.

How much should I pay myself from my LLC?

The right owner paycheck is the amount your business can pay you every month, including the slow ones, without draining the tax money or the cushion. That number comes from trailing profit, not from this month's bank balance.

Here's the simple rule we use at Planned, in order:

• Start with trailing profit: revenue minus business expenses, averaged over the last three to six months. Use six if your income swings a lot.
• Take out taxes first: 25% to 30% of profit goes to a separate tax account. We walked through the math in how much to set aside for taxes when you're self-employed.
• Fund the business cushion: about 10% of profit until the business holds two to three months of its own expenses.
• Pay yourself a steady amount: round what's left down to a clean number you can count on.

The order matters. Taxes and the cushion come out before your paycheck, so a slow month hits the business account, not your mortgage payment.

Owner's draw or salary: which one applies to you?

How you pay yourself depends on how your LLC is taxed, not on the LLC itself. A single-member LLC is taxed as a sole proprietorship by default, so you pay yourself with an owner's draw: a transfer from the business account to your personal account, with no payroll.

The IRS treats a single-member LLC as a "disregarded entity" unless you elect otherwise. That means the draw itself isn't taxed. You owe income tax plus 15.3% self-employment tax on the business's profit, whether you draw it out or leave it in.

If you've elected S corp status, it changes. You must pay yourself a reasonable salary through payroll for the work you do, and you can take the rest of the profit as distributions. What counts as "reasonable" is a call for your CPA to sign off on. Our job is the planning around it: how the salary and distributions turn into one steady household paycheck.

What does that look like with real numbers?

Let's say your LLC cleared $9,000 a month on average over the last quarter, and the business has about $4,000 in monthly expenses but only $3,000 in the bank.

Step	Monthly amount
Average profit, last 3 months	$9,000
Tax set-aside (25%)	-$2,250
Business cushion (10%, until it reaches $8,000 to $12,000)	-$900
Left for you	$5,850
Steady owner paycheck (rounded down)	$5,500

The extra $350 a month stays in the business as a buffer. If the quarter ends strong, you pay it out as a bonus. If a client pays late, it covers the gap and your $5,500 still lands on schedule.

Once the cushion is full (here, roughly $8,000 to $12,000), the $900 a month is freed up. That's usually the moment for your first raise.

Why does a steady paycheck matter for your household?

A fixed owner paycheck is what lets you run a normal household budget on business income. When you take "whatever's left," your family's spending has to guess every month, and the guess is usually wrong in both directions.

With $5,500 arriving on the same day each month, the household side works like a salaried family's: rent or mortgage, groceries, childcare and savings all get planned against a known number. Your personal emergency fund can then be sized like anyone else's. Most households should hold three to six months of expenses, and we cover how much emergency fund you actually need separately.

This is the piece most tools miss. Accounting software sees only the business, and household budgeting apps see only the home. The paycheck is where the two meet, which is why we built Planned to show both sides together. If you're comparing options, here's our take on the best app to manage business and personal finances.

When should I give myself a raise?

Revisit your owner paycheck once a quarter, ideally when you make your estimated tax payment. Federal estimates are due four times a year (the next is 2027-01-15), so it's a natural checkpoint.

At each check-in, recalculate trailing profit and run the same four steps. Raise your paycheck only if the new number holds for at least two quarters in a row. One great month is a bonus, not a raise. Cutting your own pay later is harder on the household than waiting a quarter to raise it.

If profit drops, the cushion buys you time. A two-month dip shouldn't change your paycheck. A two-quarter decline should.

What if my income swings a lot?

If your profit is lumpy, base your paycheck on a longer window or on your slower months. Seasonal and project-based owners do better with six to twelve months of history than with three.

Say your LLC made $4,000 in profit in its slowest month and $16,000 in its best over the past year, averaging $9,000. Paying yourself off the $9,000 average works only if the cushion is big enough to cover the gap in lean months. If it isn't yet, set the paycheck closer to the slow-month level, around $3,000 to $3,500 after taxes, and pay out the rest as quarterly bonuses once the reserve is full.

The IRS guidance on paying yourself doesn't set an amount for sole proprietors and partners. The number is a planning decision, which is exactly why it deserves a rule rather than a guess. For the full sequence of first-year decisions, see our business owner money checklist.

Frequently Asked Questions

Is an owner's draw from an LLC taxed?

Not by itself. For a single-member LLC taxed as a sole proprietorship, you pay income tax and self-employment tax on the business's profit, whether or not you take it out. The draw is just moving money you've already been taxed on (or will be) from the business account to your personal account. That's why the tax set-aside has to come out first.

Can I pay myself if my LLC isn't profitable yet?

You can take a draw from money you put into the business, but you can't pay yourself out of profit that doesn't exist. If the business is losing money, a draw shrinks your cash runway. Keep household expenses on savings or another income source until trailing profit can support a steady paycheck, even a small one.

How often should I pay myself from my business?

Monthly or twice a month, on a fixed date, works best for most owners. It matches how bills arrive and lets your household budget run like a salaried one. Pick the date a few days after your usual collections land, and keep the amount the same until your quarterly review.

Should I pay myself the same amount every month?

Yes, as your base. A steady amount is what makes household planning possible. Handle the ups and downs with the business cushion and quarterly bonuses rather than changing your paycheck month to month. If you need to change the base, do it at a quarterly review, after at least two quarters of evidence.

The takeaway

Your owner paycheck should come from trailing profit after taxes and the business cushion, not from whatever's in the account this month. Set it a little low, keep it steady, and review it every quarter. The business gets a buffer, and your household gets a paycheck it can plan around.