How Much Should I Pay Myself As An Interior Designer?

Let me tell you about the conversation that happens in almost every interior designer’s head around month three of running their own business: “Wait, I just landed three great projects, money is coming in, and I… have no idea what I’m actually allowed to take home.”

You’re not alone. I’ve worked with hundreds of designers who nail the creative side, build gorgeous portfolios, and win incredible clients – then completely freeze when it’s time to write themselves a paycheck. Some take too much too fast and watch their business account hit zero right before a big vendor payment. Others barely pay themselves at all, working 60-hour weeks while their bank balance grows but their personal finances suffer.

Here’s the thing: paying yourself isn’t just about moving money from one account to another. It’s about building a business that actually supports your life, your retirement, your goals. And yes, your sanity.

This guide will answer the question “how much should I pay myself as an interior designer?”, what the numbers actually look like in our industry, and how to set up a pay structure that works for your specific situation. Whether you’re a solo designer working from your dining room table or running a small firm with a team, we’ll cover the benchmarks, the structures, and the real-world calculations you need.

Ready? Let’s break down exactly how to pay yourself without breaking your business.

WHY PAYING YOURSELF PROPERLY MATTERS

Look, I get it. When you first start out, it feels easier to just take money when you need it. Project payment comes in? Transfer some to your personal account. Need to cover rent? Grab what you need. But this approach creates three major problems.

First, it messes with your taxes. The IRS has specific rules about owner compensation, especially if you’re structured as an S-Corp. Take too much as distributions instead of salary, and you might face penalties.

Second, it makes business planning impossible. You can’t forecast cash flow, plan for growth, or know if you can afford to hire help when you’re constantly pulling random amounts out of your business account.

Third, it impacts your personal financial health. Want to get a mortgage? Car loan? Build retirement savings? Lenders want to see consistent income.

Here’s what proper compensation structure gives you:

• Clear separation between business and personal finances
• Predictable personal income for your household budget
• Appropriate tax withholding and retirement contributions
• Ability to reinvest in your business strategically
• Professional credibility when seeking funding or partnerships
• Peace of mind that you’re following legal requirements

The best part? Once you set this up, it mostly runs itself. You’re not constantly making withdrawal decisions or second-guessing whether you can afford to pay yourself this month.

INTERIOR DESIGNER SALARY BENCHMARKS: WHAT THE INDUSTRY DATA SAYS

Before we talk about what you should pay yourself, let’s look at what interior designers actually earn. These benchmarks help you reality-check your compensation goals.

According to the Bureau of Labor Statistics, the median interior designer salary in the United States sits around $63,000 annually. But here’s where it gets interesting – that’s for employed designers working for firms or companies.

When you look at self-employed designers, the average interior designer salary jumps to about $72,000 according to ZipRecruiter data. Why the difference? Self-employed designers usually work more directly with clients, can set their own rates, and often have more control over their earning potential.

But these averages don’t tell the whole story.

Location makes a massive difference. An interior designer in New York City or Los Angeles might easily earn $80,000 to $100,000+ due to higher living costs and project budgets, while someone in a smaller market might see $50,000 to $65,000 as a solid income.

Experience level matters too:

• Entry-level designers (0-2 years): typically $40,000 to $50,000
• Mid-level designers (3-7 years): usually $55,000 to $75,000
• Senior designers (8+ years): often $80,000 to $120,000+
• Principal/owner with established firm: can exceed $150,000

Here’s what most designers miss: when you own the business, your total compensation isn’t just your salary. It includes your regular salary or draw, profit distributions, business-paid benefits, and tax advantages specific to your business structure.

HOW MUCH SHOULD I PAY MYSELF AS AN INTERIOR DESIGNER BUSINESS OWNER?

This is the million-dollar question. Or hopefully, at least the six-figure question!

The honest answer: it depends on your business revenue, expenses, and profit margins. But let me give you a framework that actually works.

The general rule I recommend: allocate 30% to 50% of your net profit for owner compensation.

Notice I said net profit, not revenue. This is where a lot of designers go wrong. You can’t just look at your gross income and decide to pay yourself half of it. You’ve got overhead costs, taxes, and reinvestment needs.

Let me show you what this looks like in different scenarios:

Solo Designer Making $150,000 in Annual Revenue:

• Gross revenue: $150,000
• Business expenses (30%): -$45,000
• Net profit: $105,000
• Owner salary/draw (40% of net profit): $42,000
• Business taxes and reserves: $31,500
• Reinvestment: $31,500

Small Firm Making $400,000 in Annual Revenue:

• Gross revenue: $400,000
• Business expenses including staff (55%): -$220,000
• Net profit: $180,000
• Owner salary/draw (45% of net profit): $81,000
• Business taxes and reserves: $54,000
• Reinvestment: $45,000

Established Practice Making $800,000 in Annual Revenue:

• Gross revenue: $800,000
• Business expenses including team (60%): -$480,000
• Net profit: $320,000
• Owner salary/draw (50% of net profit): $160,000
• Business taxes and reserves: $96,000
• Reinvestment: $64,000

See how the percentages shift based on business size and expenses? Your goal isn’t to hit a specific number. It’s to find the balance that keeps your business healthy while paying you fairly for your work and expertise.

Here’s my advice: Start conservatively, especially in your first two years. Pay yourself 30% to 35% of net profit, build up your reserves, and increase gradually as your business stabilizes.

INTERIOR DESIGN PAY STRUCTURES EXPLAINED

How you actually get money from your business account to your personal account depends on your pay structure. Let’s break down the most common models.

Salary vs. Owner’s Draw

A salary means you pay yourself a consistent amount each pay period, just like you’d pay an employee. This works best for S-Corps and C-Corps where you’re legally required to pay yourself a reasonable salary. You get a W-2 at year-end, and payroll taxes are withheld automatically.

An owner’s draw is when you transfer money from your business account to your personal account as needed. This works for sole proprietors and LLCs taxed as partnerships. You don’t withhold taxes, you handle them separately through quarterly estimated payments.

Base Pay Plus Profit Distribution

This is my favorite model for established designers. You set a modest base salary that covers your regular living expenses (maybe 60% to 70% of your target income), then distribute additional profits quarterly or annually based on how the business performs.

Why I love this: it gives you stability month-to-month while still rewarding you when business is strong. Plus, if you’re an S-Corp, distributions aren’t subject to self-employment tax – only your salary portion is.

Commission and Markup Models

Some designers pay themselves based on project completion or product markups. For example, you might take a 10% to 20% commission on FF&E (furniture, fixtures, equipment) purchases, or pay yourself a percentage when each project closes.

This can work, but I usually recommend it as a supplement rather than your primary pay structure. Project timelines are unpredictable, and you need consistent income.

Hybrid Structures

Most successful designers use a hybrid: a modest base salary or regular draw, plus additional compensation tied to profits or project milestones. This balances stability with upside potential.

For example, you might pay yourself $4,000 monthly as a base, then take 25% of quarterly profits as a bonus distribution. This way, you can budget your personal expenses around the base amount, and treat the profit distributions as gravy.

BUSINESS STRUCTURES AND HOW THEY IMPACT YOUR PAY

Your business structure isn’t just a legal formality. It directly affects how you can pay yourself and what tax implications come with it.

Sole Proprietor or Single-Member LLC

This is the simplest structure. You and the business are essentially the same entity for tax purposes. You pay yourself through owner’s draws – just transfer money when you need it. All business profit is taxed on your personal return whether you take it out or not.

Pros: Simple, no payroll setup required, flexible timing 

Cons: All income subject to self-employment tax (15.3%), no separation between business and personal liability

If you’re just starting out, this structure works fine. Just remember to set aside about 25% to 30% of everything you take out for taxes.

S-Corporation

This is where things get more strategic. As an S-Corp, you must pay yourself a “reasonable salary” through payroll, with proper tax withholding. Then, any additional profits can be distributed as dividends, which aren’t subject to self-employment tax.

Here’s an example: Let’s say your business nets $120,000 in profit. You pay yourself a $65,000 salary (reasonable for an experienced interior designer), which means $55,000 can be distributed as dividends. You save roughly $8,000 in self-employment taxes on that $55,000.

Pros: Significant tax savings, professional structure, clearer separation 

Cons: Payroll setup required, more administrative work, must use QBO or similar accounting software to track properly

Most designers should consider switching to S-Corp once they’re consistently netting $70,000+ annually. The tax savings generally outweigh the extra administrative costs at that level.

C-Corporation

Rare for solo designers or small firms, but sometimes used by larger practices. You must pay yourself a salary, and the business itself pays corporate taxes on profits before distributing anything to owners.

The bottom line: Your structure affects both how you pay yourself and how much you’ll pay in taxes. If you’re not sure which structure fits your business, this is exactly the kind of question our CFO services help answer.

FACTORS THAT INFLUENCE HOW MUCH YOU CAN PAY YOURSELF

Even with a solid framework, your actual compensation depends on several moving parts. Let’s walk through the key factors.

Consistent Revenue and Cash Flow

Your income as a designer probably isn’t the same every month. You might invoice $30,000 one month and $8,000 the next. This makes setting a salary tricky.

Here’s what I recommend: calculate your average monthly revenue over the past 6 to 12 months. Use that average to set your regular compensation, not your best month or your worst month.

If you use Houzz Pro to manage projects and invoicing, you’ll have a much clearer picture of your cash flow patterns. This makes compensation planning so much easier.

Overhead Costs

Before you decide how much to pay yourself, you need to know what your business actually costs to run. I’m talking about:

• Software subscriptions (design tools, Logistis for Designers, project management)
• Office space or co-working memberships
• Insurance (professional liability, general liability)
• Marketing and advertising
• Contractor or freelancer payments
• Sample and material costs

Add these up monthly. If your overhead is $6,000 per month and you’re bringing in $10,000, you’ve only got $4,000 available before taxes and your salary. This is why tracking expenses is absolutely critical.

Tax Reserves

Here’s where designers often mess up: they forget to set aside money for taxes.

As a self-employed designer, you’ll most likely owe federal income tax, state income tax, and self-employment tax (15.3% if sole prop or LLC).

Rule of thumb: set aside 25% to 35% of your net profit for taxes. Keep this in a separate savings account. Don’t touch it. Treat it like it’s already gone.

Reinvestment Needs

Your business needs money to grow. Maybe you want to hire an assistant, upgrade your software, invest in better marketing, or build up an emergency fund for slow months.

I recommend allocating 15% to 30% of net profit for reinvestment and reserves. This ensures you’re not just maintaining your current business – you’re building toward something bigger.

Stage of Business Growth

Your first year? Pay yourself minimally and focus on building reserves. Year three with consistent clients? You can afford to increase your compensation. Year five with a team and multiple revenue streams? Your compensation should reflect the business’s stability.

Don’t compare your year-one salary to someone who’s been established for a decade. Build your compensation up gradually as your business proves its staying power.

HOW TO CALCULATE A REALISTIC SALARY FOR YOURSELF

Let’s do the actual math.

I’m going to walk you through a step-by-step formula you can use to calculate your compensation.

Step 1: Calculate Your Annual Net Profit

Start with your total revenue for the year (or projected revenue if you’re planning ahead).

Annual Revenue: $200,000

Subtract all business expenses (software, marketing, insurance, contractors, samples, office costs, etc.):

Total Expenses: $70,000 Net Profit: $130,000

Step 2: Set Aside Estimated Taxes

For this example, let’s use 30% as a safe estimate (adjust based on your state and tax situation).

Tax Reserve (30% of net profit): $39,000 After-Tax Profit: $91,000

Step 3: Allocate Reinvestment Funds

Let’s say you want to keep 20% of after-tax profit in the business for growth and emergency reserves.

Reinvestment (20% of after-tax profit): $18,200 Remaining Available for Owner Pay: $72,800

Step 4: Determine Your Owner Compensation

What’s left is what you can reasonably pay yourself. In this example, about $72,800 annually, or roughly $6,067 per month.

Here’s the beautiful part: this formula automatically adjusts based on your business performance. Have a great year? Your compensation goes up. Slow year? It adjusts down, but your business stays healthy because you’re not overextending.

COMMON MISTAKES INTERIOR DESIGNERS MAKE WHEN PAYING THEMSELVES

Let me save you from the mistakes I see all the time.

Taking Too Much Too Early

Your first big project pays out $40,000 and suddenly you feel rich. You pay yourself $20,000, upgrade your car, book a vacation. Then three months later, you realize you needed that money for taxes, upcoming vendor deposits, or just basic operating expenses.

Early-stage businesses need cash reserves more than you need a bigger paycheck. Be patient. Build up three to six months of operating expenses before you start taking larger draws.

Ignoring Tax Obligations

Every designer who’s been hit with a surprise $15,000 tax bill learns this lesson the hard way. Don’t be that designer.

Set up a separate savings account. Every time revenue comes in, immediately transfer 25% to 30% to that account. Pretend it doesn’t exist until quarterly estimated tax payments are due.

Paying Yourself Inconsistently

Some months you take $8,000, other months you take nothing, occasionally you grab $15,000 when a big project closes. This wreaks havoc on your personal budgeting and makes tax planning nearly impossible.

Pick a number (even if it’s modest) and stick to it. Consistency beats optimization when it comes to owner compensation.

Mixing Personal and Business Finances

Using your business account to buy groceries. Using your personal card for business supplies. Transferring random amounts back and forth without tracking.

Stop. Just stop.

Get separate accounts. Get a business credit card. Track everything. This isn’t just good practice. It’s legally important if you’re trying to maintain liability protection as an LLC or corporation.

Forgetting About Retirement

You’re busy building a business. Retirement feels like a distant concern. But here’s the thing: you’re not building Social Security credits like a W-2 employee does. And nobody’s matching your 401(k) contributions.

As a business owner, you need to proactively set up retirement savings. Consider a SEP-IRA, Solo 401(k), or SIMPLE IRA. These let you contribute significant amounts pre-tax and build toward your future while reducing your current tax bill.

Not Seeking Professional Guidance

You’re an interior designer, not an accountant. That’s fine! But trying to figure out business structures, tax optimization, and compensation strategies on your own often leads to costly mistakes.

FINDING THE BALANCE BETWEEN PROFIT AND PAY

Here’s what I want you to remember: paying yourself isn’t selfish, it’s smart business.

You started your interior design business to create beautiful spaces and build a life you love. That second part matters just as much as the first. You can’t serve your clients well if you’re stressed about money, and you definitely can’t build a sustainable business if you’re not paying yourself fairly.

Start with the formulas and frameworks we’ve covered, but remember that your compensation strategy should evolve as your business grows. What works in year one won’t work in year five. Set a schedule, maybe quarterly, to review your numbers and adjust your pay structure as needed.

The designers who thrive long-term aren’t necessarily the most talented (though talent helps). They’re the ones who understand their numbers, plan their finances strategically, and treat their business like the valuable asset it is.

If you’re feeling overwhelmed by the financial side of your design business, you’re not alone. That’s exactly why we built Logistis for Designers – to give creative professionals the financial tools and clarity they need without requiring an accounting degree.

Want to know more ways to build a profitable design business while actually paying yourself what you’re worth? We’ve got resources that break down the exact steps. And if you want personalized guidance on your specific situation, contact us for a free consultation. We’ll look at your numbers together and create a compensation plan that actually works for your life and your business.

You deserve to be paid well for your expertise. Your business deserves to stay healthy and grow. And with the right structure, you can absolutely have both.

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