How Much Should You Pay Yourself? A Guide to Founder Compensation (That Won’t Wreck Your Startup)

If you’re a founder, figuring out how much to pay yourself can feel weird. Too little, and you’re eating ramen while running payroll for your dev team. Too much, and your burn rate makes investors nervous.

There’s no perfect number—but there is a smarter way to think about compensation, especially when taxes, R&D credits, and long-term growth are on the table.

💼 Why Founder Salary Actually Matters (Beyond Just Paying the Bills)

Your salary isn’t just a line item. It affects:

• How much R&D tax credit you can claim (yep—founder W-2 wages can count)

• Your future tax liability

• What VCs and future acquirers think of your financials

Getting it wrong can mean leaving cash on the table or raising red flags with investors and the IRS.

📊 The Sweet Spot: What We See in the Wild

Here’s what’s typical for early-stage startups:

• Pre-seed/Seed Stage: $0–$80K/year

• Series A: $80K–$150K/year

• Series B+: $150K+ with structured bonuses or equity refreshers

But these aren’t rules—they’re ballparks. What’s more important is that your compensation reflects the stage you’re in and the story you’re telling (to your team, your investors, and the IRS).

🧾 Pro Tip: W-2 Yourself

Founders often forget: If you’re taking a salary and want to claim the R&D tax credit, you must be on W-2 payroll. Distributions or 1099 payments don’t count toward the credit.

TL;DR

Paying yourself isn’t selfish—it’s strategic. Do it with intention, document it clearly, and align it with your tax strategy.

Not sure what makes sense for your startup?
Let’s talk founder pay, credits, and how to make it all work in your favor.