How should I pay myself from my company — and what will a lender think?

Short answer: pay yourself in a way you can prove. A regular wage run through payroll, or dividends your accountant properly declares, both leave a clean trail a lender can follow. Just moving money from the company account to your own account whenever you need it usually turns into a director loan, and that’s the one that causes tax headaches and confuses lenders.

You probably didn’t think about any of this the day you set up your Pty Ltd. Most people don’t. Then a year or two later, someone asks “what do you earn?” and the honest answer is “um… it depends what’s in the account”. Let’s fix that before you need to borrow.

Isn’t my company’s money just my money?

Not legally, and this is where a lot of owners trip up.

As a sole trader, you and the business are the same person for tax. You can’t employ yourself, so you take money out as drawings. The ATO’s small business course says plainly that personal drawings “are not wages” (Tax, Super + You). You’re taxed on the business’s profit through your own return, whatever you did or didn’t draw.

A company is different. It’s a separate legal person with its own bank account, its own tax return and its own money. You might own every share and be the only director, but cash in the company account belongs to the company. To get it into your pocket, it has to leave through one of a few recognised doors.

What are my options for paying myself?

There are four main ways, and each leaves a different footprint.

How you’re paid	What it is	What it leaves behind
Wage or salary	You’re an employee of your own company	Payslips, PAYG withholding, Single Touch Payroll reporting, super
Director fees	Payment for your role as a director	Similar to wages: withholding and STP reporting
Dividends	A share of after-tax profit paid to shareholders	A declaration and minutes, dividend statements, often franking credits
Loan from the company	Money you’ve taken that you’re meant to pay back	A director loan account balance, and Division 7A rules

On wages and director fees, the ATO says the company can generally claim a deduction if it meets its PAYG withholding and reporting obligations for each payment, including reporting through Single Touch Payroll (ATO Tax Time Toolkit). You then declare it as income in your personal return. And since Payday Super started on 1 July 2026, the super on those wages goes out with each pay run rather than quarterly, so budget for it.

The best mix of wage and dividends is a tax question for your accountant. What we can tell you is how each one looks when you later ask someone to lend to you.

What happens if I just transfer money out when I need it?

This is the habit we see most. Rent’s due at home, the company account looks healthy, so you move $4k across. Next month, $2,500. A holiday, a car repair, school fees.

None of that is a wage, because it didn’t go through payroll. None of it is a dividend, because nothing was declared. So in most cases it’s treated as a loan from the company to you, and it builds up in what accountants call your director loan account.

That’s where Division 7A comes in. It’s the part of the tax law designed to stop company profits reaching shareholders tax-free. Very roughly, if a private company lends money to a shareholder or their associate and it isn’t repaid, or put under a written loan agreement that meets the ATO’s terms, before the company’s tax return is due (or lodged, if that’s earlier), the amount can be treated as an unfranked dividend and taxed in your hands (ATO — Division 7A loans).

A complying loan agreement comes with minimum yearly repayments due by 30 June, and a maximum term (generally seven years, or 25 years if it’s secured by a registered mortgage over real property). Miss a minimum repayment and the shortfall can be treated as a dividend too.

One more trap the ATO calls out: borrowing again from the same company to make your repayment may not count (ATO business bulletin). So the “repay on 29 June, draw it back out on 2 July” shuffle isn’t the fix it looks like.

Already got a messy director loan and wondering if it rules you out? Usually it doesn’t. Tell us what’s going on and a real person will give you a straight answer, with no credit check to ask.

So how does a lender actually read all this?

Here’s the part your accountant may not mention, because it’s not a tax issue. It’s a lending one.

1. Your bank statements tell the story first. For unsecured and cash-flow lending, sized on turnover and bank statements, a lender scrolls through months of transactions. A fixed wage going out every fortnight looks like a business that runs to a plan. Random transfers of different sizes to your personal account look like cash leaking out, and the lender has to guess what’s normal.

2. Your personal income has to be provable. When a lender assesses you personally (common for property-secured loans, where you’re the borrower or guarantor), they want evidence. A wage gives them payslips and your income statement. Dividends are fine too, but they’re mostly checked from your tax returns and company financials, so a one-off dividend year can be harder to rely on than two years of regular ones.

3. The balance sheet shows what you’ve taken. A director loan where you owe the company shows up as an asset, often labelled “loan to director”. Plenty of lenders discount it, because it’s money that has left the business and may never come back. A large, growing balance can make a profitable company look thinner than it is.

4. Tax surprises become lender surprises. If an old director loan is about to become a deemed dividend, that’s a personal tax bill heading your way. A lender reading your file will want to know how you’ll pay it, and whether it’ll compete with their repayment.

5. The flip side can help you. If you’ve put money into the company (so the company owes you), that’s a liability on its books, but it also shows you’ve backed the business with your own funds. Lenders often like that. They’ll just ask whether you plan to pull it back out soon.

An illustrative example: two plumbers, same profit

This is an illustrative scenario. No real business is described.

Two Adelaide plumbing companies each made a similar profit last year. Both owners want about $120k to buy a second van and fit it out.

Owner A pays themselves a set wage through payroll every fortnight. At year end their accountant declares a dividend from what’s left. The company’s balance sheet shows nothing owed by the director.

Owner B never set up a wage. They transfer money across whenever the household needs it, sometimes weekly, sometimes in big lumps. By June, the director loan account owes the company a large sum, and the tax return isn’t lodged yet.

When a lender looks at Owner A, the conversation is about the van. When they look at Owner B, the first questions are about the director loan: will it be repaid, put under an agreement or declared as a dividend? What will that do to Owner B’s personal tax? What do they actually live on each month?

Owner B isn’t unlendable. But they’ve given the lender a puzzle to solve before anyone talks about vans. A quick session with the accountant and a one-page explanation of the plan (our guide to explaining your situation to a lender has a template) would change the tone completely.

How do I tidy this up before I borrow?

You don’t need a perfect setup. You need a clear, provable one. Start here:

1. Pick a regular way to pay yourself. A set wage through payroll is the easiest for lenders to follow. Talk to your accountant about the right amount and how dividends fit around it.
2. Find out your director loan balance. Ask your bookkeeper or accountant. Many owners are genuinely surprised by the number.
3. Deal with it before lodgment day. Repay it, put a complying loan agreement in place, or have your accountant declare a dividend to clear it. Don’t leave it to sort itself out.
4. Stop the ad-hoc transfers. If you need extra, run it as an extra pay or have it recorded properly. Your future bank statements will thank you.
5. Keep your lodgements current. Lenders lean on tax returns and financials to verify dividends and director loans. If yours are behind, read what happens when your tax returns aren’t done.
6. Have your story ready. If the last year or two was messy, one short paragraph saying what changed and when goes a long way.

Moved recently from sole trader to a company? Our page on switching to a company structure explains how lenders link your old history to the new entity. Still trading as a sole trader? Your drawings are simpler, though lenders will still look at how much you take compared with what the business earns.

What if the company made a loss but I still paid myself?

That happens, especially in a tough year or the first year after a big investment. Paying a wage in a loss year isn’t a red flag on its own. Lenders mainly want to see why the loss happened and whether it’s turned around. If that’s you, our page on borrowing after a loss year explains how lenders weigh it, including the add-backs your accountant can point out.

Ready to see where you stand?

Getting your own pay sorted is one of those boring jobs that pays off later. It makes tax time calmer, keeps the ATO off your back and means that when a big opportunity turns up (a second van, a bigger lease, a contract you’d love to say yes to) you’ve got clean numbers a lender can say yes to.

And if your setup is still a work in progress, that’s fine too. We regularly look at companies with director loans, lumpy dividends and owners who’ve only just started paying themselves properly. What matters is the whole picture, and we’d much rather hear it from you.

Enquiring takes about 60 seconds, and there’s no credit check when you first enquire. We don’t send your details to a pile of lenders, so you won’t get a flood of calls from people you’ve never heard of. A real person reads your situation and rings you to talk it through.

Please fill in the form accurately, including how you currently pay yourself and roughly what you need. Accurate details mean we can match you with the right option first time. Not ready yet? Try our situation search for a quick read on your particular “what if”.

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