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How Can I Pay Myself as a Business Owner: Salary, Drawings, or Dividends?

  • Nathan Yap
  • 5 hours ago
  • 2 min read

One of the most common questions business owners face is: “What’s the best way to pay myself?”


The answer depends on your business structure, tax obligations, and long-term goals. Choosing the right option ensures you stay compliant with the ATO while making your income as tax-efficient as possible.

SME 5 Must Do Tax Checklist Before tax lodgement

Salary

If your business is structured as a company, you can pay yourself a salary like any other employee.

  • Pros: Provides regular, predictable income. Includes superannuation contributions. Tax is withheld automatically through PAYG.

  • Cons: Involves payroll obligations such as super, tax reporting, and possibly workers’ compensation.


Drawings

If you operate as a sole trader or in a partnership, you generally can’t pay yourself a salary. Instead, you take “drawings” from business profits.

  • Pros: Simple and flexible — you can withdraw funds as needed.

  • Cons: Tax isn’t withheld, so you need to budget for income tax and super yourself.


Dividends

If your business is a company, another option is to pay yourself dividends from profits.

  • Pros: May be more tax-effective, particularly when franking credits are attached. Flexibility in timing — dividends don’t have to be paid regularly.

  • Cons: Dividends aren’t tax-deductible to the company, and timing/distribution must comply with corporate and ATO requirements.


What’s Best for You?

There’s no one-size-fits-all answer. The right choice depends on your:

  • Business structure (sole trader, company, partnership, or trust).

  • Profitability and cash flow.

  • Tax position and personal financial goals.


Get Expert Help from the team at Numbers Attuned

Paying yourself correctly is about more than just transferring money from your business account — it’s about staying compliant, tax-efficient, and financially secure.


If you’re unsure which method works best for your situation, The team at Numbers Attuned Accountants can help. Our team advises WA business owners on the smartest and most compliant way to pay themselves, so you can focus on running your business with confidence.



 
 
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