Founder compensation should be deliberate, consistent, and visible in the cash plan. The correct method depends on the company’s legal and tax structure, so professional tax and payroll advice is essential.
Start with a sustainable personal floor
Underpaying indefinitely can create personal pressure that harms decision-making. Define a modest amount that covers essential needs, then test it against company runway.
Match the payment method to the entity
Salary, draws, distributions, and reimbursements are not interchangeable. The proper treatment depends on entity type, tax elections, ownership, location, and services performed.
Separate reimbursements from compensation
Document legitimate business expenses under a consistent reimbursement policy rather than mixing them into informal transfers.
Set explicit increase triggers
Link compensation changes to durable revenue, cash thresholds, financing, profitability, or board approval—not one strong month.
Founder and CEO of WGF Group, helping founders connect compensation decisions to runway and financial discipline.