Learn as you go · Free lesson
Understand your pay yourself result
Start with the calculator above. Then follow the example below, one step at a time.
What this calculator does
Seeing profit does not automatically mean all of it is ready for you to take home. This calculator helps you plan an owner draw while making your chosen tax reserve, business cushion and personal pay goal visible.
An owner draw means moving money from the business to yourself. This tool is for draw planning, not payroll or company-distribution rules. It does not calculate actual taxes or guarantee a withdrawal is safe.
How it works
Enter monthly profit before personal income tax and owner draws. Choose the percentages you want to set aside for tax and for an emergency or growth cushion. Both percentages use positive profit, not sales revenue.
Then enter cash available after bills, required debt payments and existing reserves, but before these new set-asides. Unpaid invoices are not available cash. The tool limits draw capacity by both profit after the chosen targets and available cash after those targets.
Your planned draw is also capped at your personal pay goal. Cash funds the tax target first, then the cushion. If cash cannot fully fund those targets, the plan allocates no owner draw and shows the reserve shortfall. You choose the rates; the example rates are not recommendations.
Draw capacity = the smaller of positive profit after chosen reserves and available cash after chosen reserves, never below zero. Planned draw = the smaller of capacity and your pay goal.
Worked example
Example only. These are fictional business numbers, not recommended targets.
- Example: a fictional owner has $5,000 monthly profit and $5,000 cash available for this allocation. Their personal pay goal is $3,000.
- The owner chooses a 25% tax set-aside and a 20% business cushion. These example choices set aside $1,250 and $1,000 from positive profit.
- That leaves $2,750 after both targets: $5,000 − $1,250 − $1,000. Available cash supports the same amount.
- The planned draw is $2,750, not the full $3,000 goal. The personal income gap is $250. The business retains a $1,000 buffer after the modeled allocation.
- If available cash were only $2,000, it would not fully fund the $2,250 combined reserve targets. The draw would be zero and the reserve funding shortfall would be $250, even with the same reported profit.
How to read your result
The planned draw is a bounded planning amount based on the inputs, not permission to make a transfer. Check bills due soon, seasonal changes and any obligations missing from available cash before using it.
A pay-goal gap means this plan does not reach the amount you hoped to take home. It is not a score of your success. You can explore the causes, such as slow collections or low profit, without silently removing needed reserves to make the goal appear met.
Common mistakes
- Entering revenue where monthly profit is requested.
- Counting unpaid invoices as cash available today.
- Subtracting the new reserves before entering cash and then reserving them again.
- Using example percentages as if they were advice for your tax situation.
FAQ
Does this tell me my actual tax?
No. The tax field is a percentage you choose for planning. A qualified professional can help you understand what your situation requires.
Why can the draw be lower than my goal?
The calculator respects the smaller of profit-based capacity and cash-based capacity. A goal describes what you want; it does not create available money.
What if the business made a loss?
No draw is suggested from this month’s positive profit because there is none. Check the warning and your wider situation rather than treating other cash as profit.
Can the two reserve percentages total more than 100%?
No. That would allocate more than all positive profit. The tool asks you to correct that combination before calculating.
Can I use it for employee wages or my company salary?
This tool does not calculate payroll or confirm how you should pay yourself legally. Keep it for draw planning and ask an appropriate professional about your business structure.
Related calculators and guides
Educational estimates based on your inputs. Not financial, tax, or legal advice.