There are different ways to go about paying yourself, depending on how your startup is set up.
We almost always recommend setting up both:
It can be tempting to skimp on set up and just pay yourself as a contractor (more on that further down), but this set up really is the best option. Here's why:
So, under the company + trust set up, there are two main ways to pay yourself:
What about paying yourself as a contractor?
In theory, to a limited extent, this is possible but your startup company might still have to pay superannuation and workcover anyway because of the ATO’s personal services income regime. This is likely to apply if you’re earning most or all of your income from your own company.
** If you’re an ‘IP heavy’ startup company with patent or licencing possibilities, consider setting up a separate company to hold your intellectual property, alongside an operating company.
Repaying loans you've made to your startup
If you, as a founder, have provided any loans to the business and then need to draw money back out of it later, you should first be doing this as paying yourself your loan back. As such, this is not income that needs to be declared. See more on Loans to your Startup.
Reimbursing expenses you've covered
And if you (as a founder) have incurred expenses on the company's behalf and need to draw money back out of the business later on, you should also first be paying yourself back for those expenses. Again, this is not income that needs to be declared. See more on Expenses incurred personally on behalf of your startup.