How Much Should a Builder Pay Themselves?
The short answer
Pay yourself a fixed monthly wage, set from what your household needs and what the business's gross profit can carry after overheads. Put that wage into every price as a cost, then take profit on top only from a separate profit account.
- A fixed wage, every month, not "whatever's left in the account". Irregular drawings hide whether the business works.
- Your wage is a cost. It goes into your overheads or labour rate, so every price pays you.
- What's safe to take: gross profit − overheads − tax − a reserve. Profit comes on top, from a separate profit account.
- Raise your wage when margins rise, not when one big deposit lands.
Plenty of building business owners don't pay themselves a wage at all. They take money out when there's some in the account, put it back when a supplier needs paying, and hope it averages out.
It doesn't. It hides whether the business actually makes money and drains cash at the worst moments. And your prices never include you. Here's how much a builder should pay themselves, and how to grow it. Want us to work out your number with you? Book a free strategy call.
Why "take what's left" doesn't work
When you take money out irregularly, three things go wrong:
- You can't see if the business is profitable A good month looks like profit, even if it's next job's deposit.
- Your prices leave you out If your wage isn't a cost, nobody prices for it, and thin jobs pay you nothing.
- Cash runs out at the wrong time You take £5,000 the week before a big merchant bill or the VAT is due.
A fixed wage on a fixed date fixes all three. It forces the business to carry you, and it shows you very quickly if it can't.
I came to the UK with £6K of debt, started as a labourer and then worked as a carpenter. Within three years Craftex was turning over £1M a year. What changed the business wasn't more work — it was pricing properly and getting paid before we worked.
Step 1: know your number at home
Start with what your household actually needs each month: mortgage or rent, bills, food, car, debts, family. Add your own tax and National Insurance on top, or ask your accountant to turn your take-home figure into a gross one.
This is your floor. If the business can't pay it, that's the problem to solve first, and it's usually a pricing problem, not a work problem.
Still taking whatever's left in the account?
Book a free call with our team. We'll look at your margins, overheads and cash, and work out what the business can pay you.
Step 2: check how much the business can pay you
Now look at the business. You need your gross profit (price minus direct job costs) and your overheads without your own wage. (With your wage added, the same two numbers give your break-even turnover.)
| Line | Example: £500K turnover |
|---|---|
| Turnover (ex VAT) | £500,000 |
| Gross profit at 30% | £150,000 |
| Overheads excluding your wage (vans, insurance, office, admin, marketing) | −£90,000 |
| Available before your wage and tax | £60,000 |
| Set aside: reserve and growth (say a third) | −£20,000 |
| Room for your wage, before tax | about £40,000 |
The example is illustrative; tax depends on your structure, so agree the final figures with your accountant. If the "room for your wage" line is smaller than your household number, you don't need a cheaper lifestyle. You need better margins or lower overheads.
Counting a big deposit as income. A deposit is the client's money for their job: materials, subcontractors and your team's wages. Paying yourself from it means the next stage of the job has no money.
Not sure what your business can afford to pay you?
Book a free strategy call and we'll work through your numbers.
Step 3: put your wage into every price
Once you've set the wage, it becomes a cost, like the van or the insurance.
- On the tools: your days go into the job at your real day rate, like any other operative. Here's how to work out your day rate.
- Running the business: your salary goes into overheads. Overheads as a % of turnover go into every price.
- Managing the job: project management goes on the quote as its own line.
Then price to a margin: price = cost ÷ (1 − margin). The margin is profit for the business, on top of your wage, not instead of it. For the targets we use, see what margin a builder should make.
Step 4: pay yourself on a system
Run separate accounts and move money on the same days every month.
| Account | What goes in | When |
|---|---|---|
| Operating | Client payments; pays suppliers, subcontractors, wages | Every day |
| Tax | VAT, CIS, corporation or income tax share | The day money arrives |
| Profit and reserve | A set % of every payment received | Weekly or monthly |
| Your wage | The fixed amount | Same date every month |
Build the reserve to 4–8 weeks of overheads before you take extra profit out. After that, take a profit distribution quarterly, from the profit account only.
Sole trader or limited company: how you pay yourself
How you take the money depends on how the business is set up. In plain terms:
- Sole trader: the business's profit is your income. You pay Income Tax and National Insurance on the profit, whatever you take out. Your drawings aren't a business expense.
- Limited company: you're an employee and a shareholder. Most owner-directors take a salary through PAYE plus dividends. Dividends can only come from profit after corporation tax.
The best split changes with your profit and with the tax rules each year. Agree it with your accountant. Our guide to how to structure a construction company covers when to move from sole trader to a company.
When to give yourself a pay rise
Raise your wage when the numbers say the business can carry it for a year. That means margins hold on finished jobs, overheads are covered, the reserve is full and the pipeline has weeks of signed work. Not when a big deposit lands, and not to fix a bad month.
The fastest way to pay yourself more isn't more work. It's better margins on the work you already win. Ghennadi, a decorator from Northampton, went from £2K to £13.5K a month profit in 60 days, largely by pricing jobs properly and presenting quotes live.
£2K to £13.5K a month profit in 60 days
Ghennadi, decorator: pricing properly and presenting quotes live. Individual results, not typical or guaranteed.
Sviat Jay runs a working construction company, Craftex, and mentors owners one-to-one on their own numbers: pricing, margins, cash and pay. Mentoring aims for results in about 4 months, not 1–3 years. To start on your numbers, book a free strategy call.
To find your weakest area in 4 minutes, take the free Construction Business Scorecard. If the business is busy but there's nothing to pay you, read why busy builders make no profit.
The Cash Flow & Margin Blueprint
How to add overheads and a fixed salary for yourself to every price, the three-account setup and a 4-week cash forecast. 15 pages, free.
Get the free guidePaying yourself: checklist
This is general information from a contractor's experience, not financial or tax advice. For your situation, speak to your accountant. On the tools and under £500K a year? Watch our free training first.
Before you go
- You know your household number, gross and net
- You pay yourself a fixed amount on a fixed date
- Your wage is in your prices as a cost, not left to profit
- Tax and a reserve come out before any extra profit
- Your accountant has set the salary, drawings or dividend split
