Ask most trade and service business owners what they pay themselves and you get a version of the same answer: whatever's left. Sometimes that's a good month. Sometimes it's nothing, and the mortgage comes off the credit card.
That's not a wage. It's a residue. And it creates a specific, expensive blind spot: if your own labour costs the business nothing on paper, then every job looks more profitable than it is, and your prices get set against a fantasy.
This article is about setting a real number. There's a tax layer to it — and the tax layer genuinely differs depending on how you're structured — but the tax question is the second question. The first one is what the business should be paying for the work you do, and almost nobody starts there.
The number is a cost, not a reward
Here's the reframe that changes everything. Your wage is not what's left over when the business has been fed. It's the cost of the labour and management the business consumes, and it belongs in the cost base alongside vans, insurance and materials.
Think about it from the other direction. If you got hit by a bus tomorrow and the business had to keep running, what would it have to spend to replace you? Not one salary — usually two roles. There's the on-the-tools work, and there's the running-the-business work: quoting, scheduling, chasing debtors, managing staff, dealing with suppliers. In a business turning over a million or so, that's a tradesperson plus a part-time manager, and the market price of both is knowable in about twenty minutes of looking at job ads for your trade in your city.
That combined figure is what your labour actually costs the business. Whether you choose to take all of it in cash this year is a separate decision. But it needs to be in the numbers, because the moment it isn't, your gross margin is fiction and your charge-out rate is built on it.
Gold nugget. Split your own hours in two and cost them separately. Work out what you'd pay a competent tradesperson to cover your on-the-tools hours, and what you'd pay a manager or coordinator to cover your off-tools hours — then load the on-tools figure into your job costing and the off-tools figure into your overhead recovery. Most owners do neither, so the business quietly consumes forty or fifty hours a week of free labour, reports a profit that's really just unpaid wages, and prices its next job accordingly. When owners run this properly for the first time, the charge-out rate almost always turns out to be short — and not by a rounding error. That's not a pricing tweak. It's the difference between a job that funds a life and one that funds a hobby.
If that exercise says the business can't afford to pay you properly, you've learned something important — but the conclusion isn't "take less." It's that either the pricing is wrong or the overhead is too heavy for the revenue. Both are fixable, and both are addressed head-on in how to price your services so you actually make money. Taking less is the one response that fixes nothing while making the problem invisible for another year.
What structure changes, and what it doesn't
Now the tax layer, because the mechanics genuinely differ and a lot of owners are running on half-remembered advice.
If you're a sole trader, you are not an employee of your business. You can't pay yourself a wage in any meaningful sense. Money you move from the business account to your personal account is a drawing, not a wage — you don't withhold from it, and you can't claim a deduction for it. Regardless of what you transfer or when, all the income the business earns is included as business income in your individual tax return, and you make provision for the tax through PAYG instalments. The practical consequence: your "wage" has no tax effect at all. It's a budgeting decision, not a tax one.
If your business runs through a company or trust, it's a separate legal entity and the picture changes completely. The company or trust can generally claim a deduction for salaries, wages or directors' fees paid to you, provided it complies with its PAYG withholding and reporting obligations for each payment. In practice that means the business must register for PAYG withholding, withhold from what it pays you, report the withholding on its BAS, report the payment through Single Touch Payroll, pay the withheld amount to the ATO, and make compulsory super contributions to a complying fund by the due date. You then include the salary, wages or directors' fees as assessable income in your own return.
That last obligation catches people. Super applies to you too. The super guarantee rate has been 12 per cent of ordinary time earnings since 1 July 2025, and from 1 July 2026 the payday super rules changed the timing of when contributions have to be made — if you haven't worked through what that means for your own pay run as well as your staff's, start with the payday super first-month checklist.
Wages aren't the only way money comes out of a company or trust. There are also directors' fees, dividends to you as a shareholder, trust distributions to you as a beneficiary, fringe benefits like private use of a work vehicle, and loans from the company. Each has its own reporting and record-keeping requirements, and loans in particular sit inside a specific set of rules that are worth proper advice rather than a rule of thumb — the ATO has been reviewing its own published guidance in this area following a recent court decision. The short version: taking money out of a company informally, without deciding what it is, is how owners end up with a tax problem they didn't know they were building.
Which structure suits you isn't a question this article can answer, and it depends on far more than your wage. But the discipline is the same either way: decide the number deliberately, pay it on a schedule, and let the business live on what's left rather than the other way around.
Pay it like a bill
Once you've got the figure, treat it like every other fixed cost. Same amount, same day, every fortnight or month, out of the business account into your personal one. Not "when the big invoice clears."
Three things happen when you do this. Your household budget becomes predictable, which removes a low-grade stress that most owners have normalised. The business is forced to hold enough working capital to meet a recurring obligation, which is exactly the discipline it needs anyway. And your reporting starts telling the truth, because your profit line is now profit rather than unpaid wages wearing a disguise.
Keep it separate from profit, too. An owner's wage and an owner's return on the capital and risk they've put in are two different things, and blending them is how businesses end up with no idea whether they're actually working. If there's surplus after paying yourself properly, that's a distribution decision — take it, reinvest it, or bank it — but make it as a decision, not by default. That distinction sits at the heart of why so many owners are busy but not profitable.
Where to start
Look at the last twelve months and work out what you actually took out, in total, including the irregular transfers you've forgotten. Divide by twelve. That's your real current wage, and for a lot of owners seeing it written down is the whole intervention.
Then price your replacement — one tradesperson, one coordinator, at market rates in your city. Compare the two numbers. If there's a gap, it's a pricing and overhead conversation, and it needs to happen before you decide you simply can't afford to be paid.
Finally, put the figure into your monthly reporting as a fixed cost and watch what happens to your margins. It'll be uncomfortable. It'll also be the first accurate picture of the business you've had. Which reports to be reading, and what to look for in them, is covered in the five financial reports every service business owner should read monthly.
If the honest answer is that you don't know whether the business can carry a proper owner's wage, that's exactly the gap the Business Health Check is built to close: a fixed-price review of your numbers, your pricing and your cash cycle, with a written plan of what to fix first. Or take the free 5-minute scorecard if you'd rather see where you stand before you talk to anyone.