Career Planning Average Small Business Owner Salary in the U.S. How much does a small business owner usually make? By Alyssa Gregory Alyssa Gregory Facebook Twitter Alyssa Gregory is an entrepreneur, writer, and marketer with 20 years of experience in the business world. She is the founder of the Small Business Bonfire, a community for entrepreneurs, and has authored more than 2,500 articles for The Balance and other popular small business websites. learn about our editorial policies Updated on September 19, 2022 Fact checked by Sarah Fisher Fact checked by Sarah Fisher Sarah Fisher is an associate editor at The Balance with two years of personal finance and business writing experience. She has written about personal finance for SmartAsset, and has held internships at the Consumer Financial Protection Bureau and Senator Kirsten Gillibrand's office. learn about our editorial policies In This Article View All In This Article Factors That Affect Small Business Owner Salary How to Determine Small Business Owner Salary Reassessing Your Salary Frequently Asked Questions Photo: Hero Images / Getty Images Many new entrepreneurs might not know that small business owners don't get to just take money out of their business at will. Instead, they draw a salary. In addition, most of a start-up's income goes to pay operating costs or is reinvested into the business, so funds for a salary may be extremely limited. Business owners will need to consider a variety of factors when determining what salary they should draw. Key Takeaways The salary you get as a small business owner is directly affected by how much your business makesGender and experience will likely affect your salary and profits You can take a salary, a salary with bonuses, or get paid in stock options Factors That Affect Small Business Owner Salary Many Americans dream of owning their very own small business. They might be drawn to the promise of independence, autonomy, and working hard on something that belongs completely to them. There's also the possibility that your business could be a huge success. In August 2022, the salary of a small business owner in the United States ranged from about $30,000 to about $146,000 per year, according to PayScale, a compensation research company. The average business owner's salary was $63,560 per year. Experience There are a number of factors that affect where you might fall on the average small business owner salary scale. Experience is one of the biggest ones. Business owners with less than 20 years of experience tend to make between $52,000 and $62,000, according to Payscale. However, after 20 years of experience, small business owners tend to make about $75,000 per year. Gender The wage gap that affects most industries also affects small business owners. Research from FreshBooks showed that self-employed women make 28% less than self-employed men. In addition, 20% of self-employed women say they think they need to charge less than men do to get and keep clients. How to Determine Small Business Owner Salary If you’re looking for a magic formula for how much salary to take as a business owner, you’re out of luck. There’s no one way to make that decision. However, it’s helpful to know some basic numbers to help you along the way. Think about the compensation options available. A straight salary option is the easiest in terms of accounting because the payments are very clear in the books. You can also consider a salary plus bonus or commission structure. This allows you to have regular payments, but also extra payment if business is good. Some owners also prefer compensation in the form of stock options, which may be less complicated at tax time. Business Income The first thing you'll need to know is what your business can afford to pay you. If your business is a startup that hasn’t been turning a profit, you might find need to dip into your savings. Some business owners don’t take a salary at all in the early days of their business. Living Expenses You may want to try to pay yourself based on your living expenses. You can calculate the least amount of money you can take. You can do this by calculating your monthly living expenses and then multiplying by 12. So, if you typically live on $3,000 a month, you'll probably want a salary of at least $36,000 per year. Market Rate Finally, consider what a similar job might pay you for similar work. Considering your experience and skills, how much could you make on the open market? Check out the Bureau of Labor Statistics, look at trade magazines or trade organizations, and talk to other small business owners to see what salary might make sense for your industry. Reassessing Your Salary Once you’ve determined your salary, make sure you reassess it regularly. If your business is still in its early days, you might want to recalibrate your salary every six months or so. After your business is more established, you might want to switch to reviewing your salary on an annual basis. As the owner, your salary will obviously depend on how well your business is doing. If your business is doing well, your salary will go up. If your business is less successful, you will most likely need to lower your salary. Frequently Asked Questions How much do small business owners make in the USA? The average small business owner's salary was $63,560 per year in August 2022, and the salary ranged from about $30,000 to about $146,000 per year, according to PayScale. How should I pay myself as a business owner? You can draw a salary as a business owner. You can also draw a salary with the option of an annual bonus, which gives you more flexibility. You could also pay yourself with stock options. However, drawing a standardized annual salary is the easiest way to pay yourself from an accounting perspective. Was this page helpful? Thanks for your feedback! Tell us why! Other Submit Sources The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy. Payscale. "Small Business Owner / Operator." FreshBooks. "New Research from FreshBooks Discovers a 28% Wage Gap Among Self-Employed Women and Men."