Why 60% of Business Owners Never Pay Themselves (And How to Be the Exception)

What if the most expensive decision you'll ever make is staying employed forever? 

In this episode of the Smart Credit Experience Podcast, Jeri — founder of Smart Credit Solutions — shares the story of how she made the switch from employee to business owner 10 years ago and how that one decision transformed her financial life. 

From a weekly QuickBooks pay stub notification to a company-matched 401k, Jeri breaks down the real benefits of making the switch, and gives you 5 practical steps you can start taking today – even if you're still punching a clock.

What You'll Learn in This Episode

• Why paying yourself as a W-2 employee of your own business can save you thousands in taxes annually
• How running payroll creates verifiable income — real pay stubs you can use for loans, leases, and property
• A look into company-sponsored 401k and making your business match your contributions
• Why accessing business funding (loans, lines of credit, grants) to pay yourself and grow is best... all without touching personal finances
• The 4 Cash Flow Quadrants (Employee, Self-Employed, Business Owner, Investor) and where most entrepreneurs get stuck

0:00 – 2:30 — The Most Expensive Decision You'll Ever Make

2:30 – 10:30 — The Real Benefits of Making the Switch

10:30 – 18:30 — The Cash Flow Quadrant — Where Are You Living?

18:30 – 21:00 — The Art of Getting SMART

21:00 – 23:00 — Think Like a CEO — Ask Different Questions

23:00 – 25:30 — A Non-negotiable for Business Owner's Who Wants to Grow.

What if I told you that the most expensive decision you'll ever make is staying employed forever?

Now, before y'all jump on me — today I want to talk to you about a decision that I made 10 years ago that, without a doubt, has completely changed my life. And that decision is about making the switch from employee to business owner.

And I'm not just talking about quitting your job. I'm talking about making a complete identity switch. A mindset switch. A life switch. A money switch.

By the end of this episode, you're going to learn why making the switch is going to be one of the best financial moves you can make, and how to actually start making those moves today — even if you're still punching the clock.

A couple days ago, I was sharing with my audience — my social media, my email squad — about how every Wednesday I get a very sweet email notification that I love. It's a notification from QuickBooks about my paycheck being ready. My pay stub being ready.

And this isn't like a client payment. This isn't some random wire transfer. It's my paycheck as the owner of the company.

And I want you to be able to feel what that feels like one day too, because when you start seeing paychecks coming from your business — legitimate paychecks coming from your business — y'all, it hits different. It really hits different.

So what I want to do today is talk to you about why making the switch is worth it, and then give you some very practical steps you can start taking immediately to begin experiencing the benefits of making the switch.

Everybody always talks about saving money on taxes, and yes — becoming an employee of your own business is definitely going to save you money in taxes.

Here's why. As a W-2 employee, taxes are taken out of your check before you even see it. People hate it. I used to hate it too. Uncle Sam is taking your money before it even hits your bank account. At one point I was losing $500 a month just to taxes — sometimes even more. It didn't feel good to see somebody skim off the top of money I was working very, very hard for.

Now, as a business owner, it's different. You can legally reduce your self-employment tax burden by structuring your pay and your business the right way.

My business is taxed as an S-corp because we make a pretty significant amount of money. I want to be clear — you should definitely talk to an accountant you trust when it comes to taxes. Someone who can give you the right steps to get this done. I'm just sharing my own experience today because it's going to allow you to take the next best step with confidence.

Once I started running payroll and upgraded my business to an S-corp, I was able to split my income between salary — what I'm getting through my paycheck — and separate distributions as a shareholder of my company that taxes don't touch in the same way. And it saves me thousands of dollars a year. Money that stays in my pocket.

I get to keep money before anybody else sees it. At the end of the year is when Uncle Sam sees anything from me as a business owner — if they see a check from me at all. Our goal as business owners is to reduce our tax burden as much as we possibly can, and my accountant has taught me some really amazing things to help me do that.

One of the biggest issues most small business owners and entrepreneurs have is they don't have any verifiable income. They're either being paid on a 1099 as a contractor, or they're getting paid in cash with no invoices. So they don't have any verifiable income that lenders will trust.

If you're trying to buy a home, buy a car, or get into an apartment — they want to see check stubs.

When you get into business for yourself, lenders still want this. Banks want it. Landlords want it. And when you're paid through payroll as a business owner, you have it. You can legitimately supply it. You don't have to do anything shady or create check stubs out of thin air.

And let me tell you — that stuff is a thing of the past. Technology is incredibly smart. AI is smart. Lenders are starting to adopt this technology to avoid being taken by people who aren't being honest with them. So you need verifiable income, and you want to do it with integrity. You can do this by making the switch.

You can have pay stubs. You can have 100% W-2 income as the owner of your business. I have pay stubs. I've used them to get an apartment. I've used them to buy cars. I've used them for property. And they are legitimate, verifiable income.

As a business owner, you own a company. Have you ever thought about how companies set up 401ks that they can offer to employees? You can do the same exact thing.

If you're a company, you can offer a 401k as a benefit. I do. My company offers a 401k — and my company matches it. So as a business owner, I have a company-sponsored 401k under Smart Credit Solutions. Every time I run payroll, I put 7% of my paycheck into my 401k, and Smart Credit Solutions also contributes 7% to my 401k.

The good thing about this is that you set the retirement plan. You are the one in control. You control the percentage you contribute. You control the percentage your company matches. It's like you become your own best employer.

So if you want to retire on your own terms, if you want to be comfortable and never have to worry about money again — that starts with putting your money to work for you.

Too many small business owners are stuck in survival mode because they don't have a financial system in place within their business — running payroll, putting money away for retirement, completely separating business and personal finances, and setting themselves up for long-term success.

The reason I even put this podcast together is because too many business owners are out here blindly growing a business and not really financially educated on what it really takes to get to that next level. You can be the next Fortune 500 company if you really wanted to be. The benefits they're out there offering — you can offer those same exact things. So we've got to think bigger, because you can have it.

On top of everything else, what made this even easier for me to execute on is that I was able to use other people's money to do it.

You can use loans. You can use grants. You can use business credit cards. You can use funding to fund your growth and fund your payroll.

This is the one that really gets people — because when your business is structured properly and has an established credit profile, you can legitimately gain access to capital that is completely separate from your personal finances. Business lines of credit. SBA loans. You can fund your operations, pay yourself, and grow — using other people's money. Legally.

One of the biggest constraints for small businesses is that they have a really hard time growing because growth requires a lot of cash. A whole lot of it. If you don't have cash to put into hiring help, running payroll, or covering taxes — I understand why you feel stuck.

But here's the thing: businesses aren't meant to be run using your personal finances anyway. Your personal finances are for you to live and take care of your responsibilities. A business requires a lot more resources. So use other people's money to get it done.

Those are the top four benefits I love most — saving on taxes, having verified income, building my retirement on my own terms, and using other people's money to grow.

Now I want to talk about how you can really put this into play. How you can take the next step and change the way you see money and grow your business forever.

I'm a reader — anybody that knows me knows I love to read. And I once read a book back in my high school days called Rich Dad, Poor Dad by Robert Kiyosaki. He also has a companion book called The Cashflow Quadrant. I read both books, and without a doubt, the way he breaks down how all income is earned into four categories — represented in four quadrants — really changed the way I think about money, growing a business, and setting myself up for financial freedom.

If you've never heard of the Cash Flow Quadrant, I encourage you to Google it right now. You should find a diagram easily. I'll also leave it below this video if you're watching or listening at smartcreditcoach.com.

There are four quadrants: Employee, Self-Employed, Business Owner, and Investor.

E — Employee

Most people live here. You trade time for money. Someone else sets your schedule, your salary, and your ceiling. Security feels good in this quadrant — but it's mostly borrowed security.

Even recently, since COVID, a lot of things have been happening. People are losing their jobs. Artificial intelligence is taking over. People feel stuck with nowhere to go and no plan. There is no real security in being employed because you're literally just one layoff, one diagnosis, or one bad quarter away from losing it all.

And the taxes? As a W-2 employee, you pay the highest taxes of any quadrant.

S — Self-Employed

This is where a lot of entrepreneurs actually get stuck. You leave your job — I did this. I got stuck here for about two years. You basically buy yourself another job. You become a glorified employee.

As a self-employed person, you're normally a freelancer, a consultant, a solo operator. You're working really hard, but if you stop working — if you get sick, need a vacation, or you're just burnt out — the money stops.

In this quadrant, you own a job. You don't own a business. And we've all been there. Everyone starts here. The question is: how do you graduate?

B — Business Owner

This is where the real switch happens. This is the switch from employee to business owner.

In this quadrant, you've built a system. You've built teams. Your business is generating income whether you show up or not. You're not the product — you run the product.

And here's what most people don't understand: business owners in this quadrant pay some of the lowest taxes legally because of how income is structured.

I know you don't want to stay stuck working your business 24/7 for the rest of your life. I know you don't want to keep being stuck in hustle mode. I know you want more sleep, paid bills, more vacations, more time with your family. But that's only really going to happen in the Business Owner quadrant.

This is where I made the switch — from letter pusher and credit repair person, to educator, scaler, team builder, and leadership developer. I own a system. If I decide to take a vacation, my business still runs. It still makes money. And that's what you want.

You want to make the switch from paying the most taxes and having the least freedom — to paying the least taxes and living life on your own terms.

I — Investor

This is the end game. When your money is making money for you. Your assets are generating income.

Did you know that your business is an asset? Did you know that your credit is an asset? Because they grow in value over time — and that is the definition of an asset.

If you think of your business and your credit as assets, you can keep building on them forever. They open up new opportunities for you to live life on your terms. The wealthy live here.

But you can't get to Investor without first moving to Business Owner, because there's a mental switch that happens. As a business owner, you learn that you can't do everything yourself. You learn to tap into the power of leverage. And you can't master investing until you've mastered being a business owner.

The problem is most people spend their entire lives bouncing between Employee and Self-Employed, wondering why they can never get ahead. The answer is you're stuck in the quadrant — and you have to make the switch.

Which quadrant are you in right now? And more importantly, which one do you want to be in?

Alright. Let's get practical. Because I'm not here to just inspire and entertain you — I'm here to give you steps you can start making right now.

1. Get SMART

I don't mean smart like getting clever. I mean get SMART about your goals — Specific, Measurable, Achievable, Relevant, and Time-Bound.

One thing my mentor taught me was: nothing becomes dynamic until it becomes specific. Stop saying things like "I want to make more money," or when I ask how much funding you're looking for and you say "as much as I can get." That's too vague.

Instead of saying "I want to make more money," say "I want to generate another $8,000 this month in revenue from my consulting business in 30 days." That's specific. Or: "I want to build my business credit and reach $50,000 in the next six months without using my personal credit." Now that's a goal you can work with.

The problem I find is that people don't get specific with their goals because then they'd have to take responsibility for not meeting them. As long as you stay vague, you won't hold yourself accountable — and you won't feel responsible for the outcome.

So get SMART with your goals. Our Smart Credit method is all about SMART goals because we know it works. 80% of the people who take our programs complete them. And there's a reason for that. The method works.

Get specific. Stop being vague — especially if you have dreams of getting funded and growing a business.

2. Start Thinking Like a Business Owner

Many people get stuck between self-employed and employee because they're still thinking like an employee trying to be a business owner. But you can't think like an employee and be a business owner at the same time.

As a business owner, you have to think completely differently. Most employees are thinking, "How do I get a raise?" Business owners ask themselves, "How do I build another revenue stream?" Employees protect their time. Business owners invest it.

Start asking different questions and you'll start getting different answers and different results. Ask yourself: what would CEO me do in this situation right now? If the answer is hire the professional — do it. Take the course — do it. Make the sales calls — do it.

Because how a man thinketh, so is he. If you keep thinking like an employee, you're going to keep getting employee results. When you start thinking like a business owner, you get business owner results.

3. Read the Books

How do you start thinking like a business owner? Read. That's my answer.

I cannot stress this enough. Your competition is reading. The people you want to be like are studying. If you're not — they're winning by default.

Some of the best books I could ever encourage you to read:

- Rich Dad, Poor Dad by Robert Kiyosaki
- The Richest Man in Babylon by George S. Clason
- The E-Myth Revisited by Michael Gerber
- Profit First by Mike Michalowicz
- $100M Offers by Alex Hormozi
- The 7 Habits of Highly Effective People by Stephen Covey

My library is thick. And let me tell you — a library card is free. Audible is $10 a month. There is no excuse, my friends. No excuse not to be feeding your mind.

Have a goal to learn something new every single day. Because you have to reprogram yourself. We have been programmed in this society to be average. We've been programmed to make excuses, to procrastinate, to stay safe. So you have to put forth some serious effort to reprogram yourself.

4. Listen to Business-Related Content

If you're not reading books about business, if you're not listening to podcasts about business — what are you doing? What are you listening to? If you're feeding your mind with gossip and noise, I really don't know what to tell you.

Listen to the content. Read the books. Do it during your commute, your workout, your lunch break. These are learning opportunities.

Stop scrolling social media all day. Swap the music for a podcast. Swap reality TV for a MasterClass or a course. I'm not saying never relax — but you've got to get focused. Shut off the noise, shut off the distractions, and get intentional if you really want to make a change.

Because if you already had the skill, the knowledge, and the know-how to do it — it would've already gotten done.

5. Drop the Ego

There is nothing worse than a big ego and a small bank account. I have seen this time and time again. People who are too proud to ask for help. Too proud to take a course. Too proud to admit when they don't know something.

The most successful business owners I know are the most coachable people in the room. They listen attentively, they take notes, they ask questions, and they take risks.

Humble yourself. Because there's always someone who knows something you don't. And when you realize how much you don't know, it's quite humbling. Everything is just what you think you know.

So tune in, stay humble — because little tidbits of information that you might've otherwise missed can change your life. Always be a student.

Before I Let You Go

I've listened to a very reputable speaker named Jim Rohn for several years. He is one of the greatest personal development teachers who have ever lived. And I remember him saying:

 "If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much."

Life is a gift, and you want to plan it out — because it's yours to live and nobody else's. You are not meant to spend the best years of your life building someone else's dream. You have gifts. You have ideas. You have value. And it's time you built a vehicle that's worthy of delivering all of that.

You can build a business that delivers freedom, happiness, and joy — just because you took that leap.

Making the switch isn't just about making a financial decision. It's about making a statement. It's you saying: I believe in myself enough to bet on me.

So if nobody else has told you today — you can do this. The path is not always easy, but it is absolutely worth it.

If today's episode lit something up in you and you're ready to take the first step — whether that's getting your business structured, building your business credit, or getting access to funding that actually puts you on payroll and grows your wealth — my team at Smart Credit Solutions is ready and happy to help.

Head over to smartcreditcoach.com and get matched with a Smart Credit Certified Consultant. We can help you get funded, structured, and paid.

Until next time — keep building, keep growing, and don't you dare stop your grind.

I'm Jeri, and this has been the Smart Credit Experience Podcast. See you next time.

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