How Much Do Small Business Owners Earn?

Entrepreneurship and business ownership come with risks. But the potential for higher income and a better long-term financial situation provides an upside.

If you’re considering starting a business or buying an existing business, you may be wondering how much you should expect to earn as a small business owner.

The truth is, the possibilities are all over the place. In this article, we’ll look at the averages as reported by many sources, plus the data behind those numbers. It’s important to remember that a “small business owner” can include a wide range of people, including solopreneurs working part-time hours. The numbers you’ll find in this article may serve as a helpful frame of reference, but there are far too many variables to rely on any of these averages and assume that they would apply to you and your business.

How Much Small Business Owners Earn

The reason why small business owner income estimates swing so wildly is the methodology. Each source is counting something slightly different.

ZipRecruiter scrapes job postings and self-reported figures, which skew toward more established, higher-earning operators. PayScale relies on data submitted by people in the role. Gusto reads real payroll records from the small businesses that run payroll through its platform. Some sources count the total business profit. Others count only the formal wage an owner pays themselves. A few lump in part-time solopreneurs alongside owners running businesses with a dozen employees.

Average small business owner salary:

Gusto (payroll records): $57,600 median cash wages
Salary.com: $63,190 average
Payscale: $77,823 average
Comparably: $80,588 average
ZipRecruiter: $127,973 average

There’s also a helpful government data point. The Bureau of Labor Statistics’ Consumer Expenditure Survey reports the average self-employment income at $62,587 in 2024, down from $68,030 the year before.

🧠 Key Insight

The most reliable view comes from payroll records, not job listings. Gusto’s data, drawn from actual small businesses, shows a median of $57,600 a year in cash wages. That’s meaningfully lower than what job sites report, because those sites tend to capture established businesses and self-reported figures that run high. If you’re using national averages to set expectations, know that many of the higher numbers describe a narrower, more successful slice of owners.

(Sources: Payscale, ZipRecruiter, Salary.com, Gusto, Comparably, BLS)

Small Business Owner Income by Industry

Industry is one of the factors that influences the average income. Gusto’s payroll data shows that business owners in the information sector earn the most, with median pay around $7,400 a month, or about $89,000 per year. Owners in Food Services are at the bottom, with a median closer to $2,000 a month. Knowledge-based fields like Information and professional services pay owners roughly two to four times what consumer-facing fields like retail and food services do.

Glassdoor’s data shows that IT business owners report a median total pay of $137,000, construction and maintenance around $100,000, and management consulting close to $98,000.

Margins and overhead influence the figures. A consultancy sells expertise with very little overhead, so more of each dollar reaches the owner. A restaurant has rent, inventory, equipment, and a payroll, and the owner gets what’s left.

(Sources: Gusto, Glassdoor)

How Experience and Business Stage Affect Earnings

The other big variable is time. National averages blend a business that opened last month with one that’s been running for twenty years, which is why they can be so misleading for anyone trying to figure out what’s typical.

The Early-Stage Reality

Plenty of owners pay themselves nothing for the first year or two. PayScale’s entry-level data shows an average of around $34,700.

Money tends to flow in the other direction at first. According to the Federal Reserve Banks’ 2023 Report on Nonemployer Firms, 76% of nonemployer startups use the owner’s personal funds to finance the business. During the startup phase, owner pay often runs in the range of 5% to 10% of revenue, with everything else going back into growth.

(Sources: PayScale, Fed Small Business)

Growth and Maturity

As revenue stabilizes, owner pay climbs. In the growth phase, somewhere between years two and five, many owners move into the 15% to 25% range. Established businesses can often support owner compensation of 30% to 50% of net profits, according to industry benchmarks.

(Source: Xero)

💡Pro Tip

Don’t benchmark your pay against the national average. Benchmark it against your stage. A two-year-old business should expect a very different number than a ten-year-old one, and comparing yourself to a blended figure that mixes both will either discourage you or give you false confidence. Find data for businesses at your stage, in your industry, and use that as your reference point.

How Small Business Owners Actually Pay Themselves

This is the reason the word “salary” causes so much confusion. How you pay yourself depends entirely on how your business is set up.

There are two main routes. An owner’s draw is a withdrawal from the business’s profits, with no taxes withheld at the time. Sole proprietors, partnerships, and most LLCs pay themselves this way. A salary runs through formal payroll with taxes withheld, and the IRS requires it for S-corp and C-corp owners who actively work in the business. Those owners can’t just transfer money to themselves and call it income. They have to pay what the IRS calls “reasonable compensation.”

📖 Definition

Owner’s draw: Money an owner takes out of the business for personal use, drawn from profits rather than paid as a formal wage. No taxes are withheld when you take a draw, so you’re responsible for setting aside money for self-employment and income tax yourself. It’s the default method for sole proprietors and most LLCs.

What About the Hours?

Income only tells half the story. The other half is what you trade for it.

Small business owners work a lot. A survey from The Alternative Board found that 84% work more than 40 hours a week, 19% work more than 60. The average owner clocks around 49 hours, even though they’d prefer to work closer to 42. Weekends aren’t off-limits either, with 76% reporting they’ve worked one and 16% working every weekend.

Put that next to the earnings data, and the picture sharpens. A $57,600 paycheck on a 50-hour week works out to about $22 an hour. An employee earning that same $57,600 on a standard 40-hour week is making closer to $28 an hour. Owners often earn more on paper while making less per hour of their time, at least until the business matures enough to run without them in it constantly.

🎯 Why It Matters

The headline number isn’t the whole deal. When you factor in the hours, the lack of employer-paid benefits, and the personal risk, owner pay looks less like a windfall and more like fair compensation for a hard job. None of this is a reason to avoid ownership. It’s a reason to be clear-eyed about the tradeoff so you can build toward the version of the business that eventually pays you well for fewer hours, not more.

(Source: The Alternative Board)

Factors That Influence How Much You’ll Earn

A few variables move the needle more than the rest.

Location

Geography matters, both for what you can charge and what your money is worth. ZipRecruiter’s city-level data shows owners in places like San Francisco earning well above the national average. But a higher gross figure in a high-cost city doesn’t always beat a lower figure somewhere cheaper, so cost of living deserves as much weight as the headline number.

Business Type and Structure

Most businesses in the country don’t have any employees at all. The Census Bureau counted more than 30 million nonemployer businesses in 2023, the solo operations that make up the vast majority of American businesses. These tend to generate modest revenue compared to firms with payroll. See our Solopreneur Statistics report for more details.

Revenue vs. Profit

Revenue is what comes in. Profit is what’s left after the business pays for everything it needs. A business doing $500,000 in revenue might leave its owner with $60,000 once rent, inventory, payroll, and taxes are covered. High revenue and high owner income aren’t the same thing, and confusing the two leads people to overestimate what a given business will actually pay them.

How to Increase Your Income as a Small Business Owner

The national averages aren’t a ceiling. Most owners have more room to grow their take-home pay than they think, usually without working more hours.

Revisit your pricing. Underpricing is the most common reason capable owners earn less than they should. A modest increase often flows almost entirely to the bottom line, since your costs don’t rise with it.
Stop doing low-value work yourself. Every hour you spend on tasks someone else could handle is an hour you’re not spending on the work that actually grows the business. Delegating or automating the busywork frees you up for higher-leverage activity.
Move toward higher-margin offerings. Shifting your mix toward services or products with better margins raises owner pay even at flat revenue.
Diversify how money comes in. A second revenue stream smooths out the slow stretches that force owners to cut their own pay first.
Check your structure for tax efficiency. Depending on your profit level, electing S-corp status can change how much of your income gets taxed. This is a CPA conversation, not a DIY one, but it’s worth having.

⚡ Quick Win

Calculate your real hourly rate today. Take what you actually paid yourself last month and divide it by the hours you actually worked. Most owners are surprised by how low the number is, and that surprise is useful. It tells you whether your problem is pricing, hours, or scope, and it gives you a baseline to measure against as you make changes.

FAQ

What is the average small business owner’s salary in the US?

Estimates range widely depending on the source and what’s being measured. Payroll-based data from Gusto puts the median around $57,600 a year in cash wages, while job sites like ZipRecruiter report averages near $128,000. The real number for any given owner depends heavily on industry, how long the business has operated, and how the owner takes money out of the business.

How much do entrepreneurs make in their first year?

Often very little, and sometimes nothing. Many owners take no salary in the first year or two while reinvesting in the business, and most new businesses are still working toward break-even, which commonly takes 12 to 18 months. Entry-level owner pay averages around $34,700, though plenty of first-year owners come in well below that.

What industry pays small business owners the most?

Knowledge-based industries lead. Owners in the Information sector earn a median near $89,000 a year, and Professional Services owners are close behind. Consumer-facing industries like Food Services and Retail sit at the bottom, with food service owners earning a median closer to $24,000. The difference comes down to margins and overhead.

Do small business owners make more than employees?

On average, yes. But the comparison is incomplete without accounting for the longer hours most owners work, the personal financial risk they carry, and the benefits employees get that owners have to fund themselves. Owners often earn more in total while earning less per hour of their time.

How do small business owners pay themselves?

Through an owner’s draw or a formal salary. A draw is a withdrawal from profits with no tax withheld, used by sole proprietors and most LLCs. A salary runs through payroll with taxes withheld, and the IRS requires it for S-corp and C-corp owners who work in the business. Many owners use a combination once the business can support it.

What percentage of profits should a small business owner take as salary?

It depends on your stage. Established businesses often support owner pay in the range of 30% to 50% of net profits. Startups typically keep it much lower, around 5% to 10%, while reinvesting the rest into growth. The SBA notes that most owners pay themselves less than half their profits.