Owner Wealth: Pay Yourself First, Then Scale
You don’t build wealth by “seeing what’s left.” You build it by paying yourself first—on rails you can’t ignore—then scaling what’s working. This is a practical, bank-account-level system you can set up in a day.
What “pay yourself first” looks like for an owner
It’s not a vibe. It’s a workflow:
Separate bank buckets.
Automatic transfers on a fixed cadence.
Targets that match your model and tax reality.
A retirement account you actually fund, not someday.
Safety rails that keep you from raiding your future.
You’ll feel the difference in two weeks—because your personal accounts start filling without drama.
Step 1: Open the right buckets (business)
Create four business sub-accounts and one personal hub:
Operating (OE) – bills and run rate only
Owner Pay (OP) – your take-home (transfers to personal)
Taxes (TX) – federal/state/self-employment set-aside
Profit (PF) – small, sacred slice you don’t spend
Personal Hub – your checking where Owner Pay lands
This mirrors the proven “multiple accounts” approach from Profit First—prioritizing owner pay, taxes, and profit before expenses.
Step 2: Choose your default split (start simple)
Pick a baseline allocation for every dollar collected (not invoiced):
OP 30–40%
TX 15–20% (aim toward your effective tax rate)
PF 1–5% (start small, raise later)
OE the rest
Adjust after 30 days with real data. If margins are thin, start OP lower (e.g., 30%) and PF at 1%—then step PF up.
Why this works: You’re turning “owner leftovers” into owner first. The operating account gets what’s left, forcing smarter pricing and scope—exactly as the Profit First method intends.
Step 3: Automate the money movement
Twice-weekly sweeps (e.g., Tue/Fri 10:00am):
Move all collected cash from Checking → OP/TX/PF/OE per your split.
Pay bills from Operating only.
Transfer Owner Pay to your Personal Hub twice a month (e.g., 1st & 15th).
TX funds never touch Operating. Quarterly estimates are paid from TX.
Automatic transfers beat willpower. Put them on the calendar and automate with your bank.
Step 4: Set real targets (not wishes)
A) Personal safety first
Emergency cushion: Personally, target 3–6 months of baseline living costs.
Business runway: Target 4–8 weeks of Operating expenses (more if sales are lumpy). SCORE’s guidance on reserves is a range, not a rule—set yours based on stability, industry, and risk tolerance.
B) Retirement contributions (2025 limits)
Pick a plan that matches your cash pattern:
Solo 401(k): Employee deferral limit $23,500 (2025), plus employer profit sharing up to an overall $70,000 (excl. catch-up). Age 50+ catch-up $7,500.
SEP-IRA: Up to 25% of comp capped at $70,000 for 2025 (employer only). Good when income varies and you fund after year-end.
SIMPLE IRA: Employee limit $16,500 for 2025; catch-up rules apply; employer match rules are specific.
Health hedge: If you’re HSA-eligible, 2025 HSA limits are $4,300 (self-only) and $8,550 (family), +$1,000 catch-up if 55+. HSAs can be triple-tax-advantaged and double as a stealth retirement bucket.
Owner reality check (S-corps): You must pay yourself reasonable compensation before distributions. Don’t starve salary to juice distributions; document your rationale.
Step 5: Build the personal side rails
Once Owner Pay hits your Personal Hub, run a second set of automations:
Same-day transfers to:
Household checking (monthly bills)
High-yield savings (3–6 months living expenses)
Roth/Traditional IRAs if eligible (and/or taxable brokerage)
HSA (if eligible)
Set these to pull the day Owner Pay lands so lifestyle creep can’t grab it.
Step 6: Make growth earn its keep
You scale after you fund OP/TX/PF and maintain runway. If a growth idea can’t survive inside those constraints, it’s not strategy—it’s gambling.
Guardrails:
Runway floor: If Operating < 4 weeks, freeze non-essentials.
Profit promise: Move PF to a separate bank; do a small quarterly distribution.
Pricing sanity: If OP and TX buckets are light, raise rates, trim scope, or kill low-margin offers.
Step 7: Quarterly “raise” and plan optimization
Every quarter:
Review your last 90 days: Collected revenue, gross margin, runway, and effective tax rate.
If runway ≥ 6 weeks and PF is steady, increase OP by 1–2 points.
Recalculate your retirement plan capacity based on actual W-2 (S-corp) or net earnings (sole prop/partnership), staying within 2025 limits above.
If you’re consistently maxing a Solo 401(k), consider a safe harbor 401(k) when you add staff to avoid testing headaches.
Owner Wealth Playbook (90-minute setup)
Minute 0–20 — Open/label accounts
Business: OP, TX, PF, OE.
Personal: Hub (checking), HYSA for emergency fund.
Minute 20–35 — Pick your split
Start OP 35 / TX 18 / PF 2 / OE 45 (example). Write it on the wall.
Minute 35–55 — Automate transfers
Bank rules for Tue/Fri sweeps; 1st & 15th Owner Pay moves; same-day personal automations.
Minute 55–75 — Choose your retirement vehicle
Solo 401(k) if you want employee deferrals + employer profit share up to the 415(c) cap (2025).
SEP-IRA if you want pure employer funding with flexible year-end timing.
SIMPLE IRA if you have employees and want easy admin. Capture 2025 limits.
Minute 75–90 — Put rails in writing
One-pager: allocation split, runway floor, stop-spend trigger, and retirement/HSA targets with the latest IRS numbers. Keep links handy (IRS COLA page; Solo 401(k) and SEP overviews).
Red flag fixes (copy/paste rules)
If Operating dips below 4 weeks, then pause discretionary spend and accelerate collections (invoice partials, add fast-pay incentives, put slow accounts on autopay).
If TX balance lags projected estimates, then raise the TX percentage by +2 points for the next 60 days.
If OP can’t fund your personal baseline for two consecutive pay periods, then raise prices by 10% on all new quotes and remove the lowest-margin add-on until OP stabilizes.
If retirement contributions stall, then schedule monthly transfers (not year-end guessing) sized to max the plan by December within 2025 limits.
Two links worth bookmarking
IRS 2025 retirement plan COLAs & plan overviews: elective deferral, 415(c) overall, SIMPLE, SEP. IRS+3Tax News+3IRS+3
HSA 2025 limits (self-only $4,300 / family $8,550): useful “stealth IRA” if eligible. Fidelity
Book a Personal CFO Setup
In one focused Power Hour, we’ll install your owner-first system: bank buckets, automated transfers, 90-day split, runway floor, and a retirement/HSA funding plan using 2025 limits. You’ll leave with a playbook that pays you first—then scales what’s working.