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You’ve put in the hours. You’ve built the thing. You’re generating value (and probably juggling 14 things at once). So yes — you deserve to get paid. Properly.
But if you’ve ever hovered over your online banking wondering whether it's “fine” to move some money from your business account to your personal one… you’re not alone. Figuring out how to pay yourself isn’t always straightforward — and it’s one of the most common things business owners forget to plan for.
So let’s make it clear.
First, Start with the Right Mindset: Profit First
Before we jump into PAYE vs drawings, we need to talk about mindset.
In the book Profit First by Mike Michalowicz, he flips the traditional accounting formula on its head:
Old way: Sales – Expenses = Profit
Profit First way: Sales – Profit = Expenses
Translation? Pay yourself first — and run the business on what’s left. Because let’s be real: when you wait to see what’s left over, it’s often nothing.
This mindset shift helps you build a business that’s not just “busy” — but sustainable and rewarding. At Azure Advisory, we help clients build pay structures that support the business and the person running it. (Yes, that’s you.)
Option 1: Drawings / Shareholder Salary
Drawings are the most common way business owners pay themselves — especially when you’re just starting out. It’s not a wage or official salary; it’s just money you’ve taken out of the business for personal use.
But here’s the catch: no tax is deducted when you take drawings. Instead, tax is calculated later — once we prepare your annual accounts and allocate a shareholder salary.
Let’s say your company earns $150,000 this year. After a thorough tax planning session (with us, of course), we decide to pay $120,000 to you as shareholder-employee salary. That $120,000 is what you’ll be taxed on.
Now, if you’ve taken out $140,000 during the year — we’ve got a wee problem. That means you’ve drawn more than what the company could pay to you, leaving you with an overdrawn current account. Naughty!
We’ll dive into what that means (and what to do about it) in a future blog.
Bottom line: be proactive.
If your net profit is around $5,000 per month, it’s wise to draw $4,000 and tuck away $1,000 for tax. Your future self will love you for it.
What to understand what’s your net profit and shareholder salary? Book a Clarity Call
What if you’re a sole trader or contractor?
You don’t get shareholder salaries — your income is simply the profit your business makes. You also can’t put yourself on PAYE, either. However, we recommend tools like Hnry can take care of tax, ACC, and KiwiSaver for you — no spreadsheets, no stress, no drama.
Option 2: PAYE Salary
If your business is a company, you can put yourself on payroll — like a regular employee. That means:
Your PAYE, KiwiSaver, and ACC are taken care of
You get a regular, reliable income
The banks will love you (hello, mortgage approval)
Just remember — if the company makes more than your salary, the leftover profit is still taxed in the company’s hands.
PSA: Stop Mixing Business and Personal Money
We see it all the time — the business bank account looks flush, and your personal one is crying for help. You think, “Just a little dip won’t hurt…”
But trust us — that’s the fast lane to stress, confusion, and awkward questions from your accountant (hi 👋).
The most successful (and least overwhelmed) business owners we work with keep it clean:
No mixing
No mingling
Your business is not your wallet
Set up regular transfers. Pay yourself properly. Keep your accounts separate. Your tax return (and your sanity) will thank you.
Key Takeaways
Pay yourself first — it’s not selfish, it’s sustainable.
Drawings/Shareholder salaries work well and offer flexibility but require discipline and decent tax planning.
PAYE salary offers structure and simplicity (and is bank-approved!).
Separate your business and personal finances — always.
Want help working out the best way to pay yourself?
This is where we come in.
At Azure Advisory, we help business owners choose the best method based on their structure, goals, and cash flow. We’ll also make sure your IRD obligations are met, ACC levies are considered, and tax surprises are avoided.
Getting it right can save money — and headaches.
