Self-Employed and Wondering: “How Do I Pay Myself?

Client: “How do I pay myself?”

Me: It’s simple—write yourself a check, make a transfer, or withdraw cash. It’s your business.

Client: “But my last tax preparer said I couldn’t pay myself from my own business. That it wasn’t allowed.”

Me: 😲🙄🤦‍♀️

Let’s clear this up: If you’re a sole proprietor or a single-member LLC, you can absolutely pay yourself. That’s the whole point—you are the business. You’re not on payroll, so there’s no W-2 involved, but you’re entitled to take an “owner’s draw” as needed.

If you’re working hard and bringing in income, there’s no reason that money should just sit in the business bank account untouched. Your business exists to serve you—not the other way around.

👉 And just to clarify:

You do not have to issue yourself a 1099-NEC. You’re not a contractor to your own business—you’re the owner.

However, you do need to issue 1099-NECs to any independent contractor or non-employee service provider you paid more than $600 during the year by check, ACH, Zelle, cash, or other direct payment methods (excluding payments made via credit card or third-party apps like PayPal, Venmo, CashApp business, which are handled by the payment processor).

Reference: 

26 U.S. Code § 6041A clarify that payments over $600 made in the course of a trade or business for services rendered must be reported on Form 1099-NEC, unless processed through a third-party settlement organization (TPSO).

Unfortunately, not all tax preparers are created equal. Some offer outdated advice or simply don’t understand small business tax rules. That’s why it’s so important to:

• Verify your preparer’s credentials (look for Enrolled Agents, CPAs, or licensed tax professionals)

• Check reviews and client recommendations

• Get a second opinion once in a while—especially if you’ve been using the same software or person for years

A review can catch costly mistakes and make sure you’re maximizing your business’s potential—because you deserve to get paid for your hard work.