How do sole traders pay themselves?
Understand how taking money from a sole trader business differs from paying wages or dividends.
Summary
A sole trader is the individual running the business, so money taken from the business is generally not treated the same way as wages paid to an employee or dividends paid by a company. The ATO has guidance on using business money and assets and separating business from private use.
What this means
Because a sole trader and the business are not separate legal entities in the same way as a company, drawings from the business are different from employee salary payments.
Even if money is taken for personal use, the business still needs proper records of income, expenses, and private use.
Typical actions
- Keep clear records of money taken from the business for personal use.
- Separate business and private transactions where possible.
- Do not treat personal drawings as deductible wages to yourself.
- Check tax payment planning, including PAYG instalments if applicable.
Official ATO sources
Last checked: 20 June 2026
Using business money and assets
Explains business money and private use issues.
Sole trader business structure
Explains the sole trader structure.
Business, partnership and trust income
Explains reporting business income as an individual.
Related questions
- How is sole trader income taxed?
- Do sole traders need a separate business bank account?
- What records do sole traders need to keep?
- Do sole traders pay PAYG instalments?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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