My Business Outgrossed My Husband’s Engineering Income by 29% Last Month — But I Took Home 75% Less Than He Did

Entrepreneurialism

Dec 3

In the ten years we’ve been together, my business has only outgrossed my husband, Shelby’s salary two or three times. Even while he was on unemployment during the Covid pandemic he grossed and took home more than I did.

It’s not that my business hasn’t been successful, it’s just hard to beat an engineer’s salary. (Or in the case of Covid, that extra $600 a week.)

In 2019, my business finally grossed more than I ever made from a full-time job, and I haven’t hit that income level since.

Up until October 2024 my business experienced a prolonged drought, but all of a sudden circumstances shifted and I’ve been flooded with work. Which is why my November income exceeded Shelby’s.

But despite my business grossing 29% more than he did from his job, I took home 75% less — and I had five pay periods while he only had four.

Why did I earn a chunk more and take home significantly less? Blame taxes, expenses, benefits, and my own financial planning.

Self-employment taxes are higher

When you work for an employer, they cover half of your Social Security and Medicare taxes. When you’re self-employed, you pay both the employee and the employer portions — meaning you pay double the tax than if you were employed.

Therefore, I contribute at a higher tax rate than Shelby does.

Businesses incur expenses

The majority of employees aren’t required to pay for the tools they need to do their jobs. Instead, an employer provides computers, software, office supplies and equipment, insurance, cost of goods sold, etc.

When you own a business, your business has to provide it all.

While my expenses are much lower since I began working from home earlier this year, I pay a few hundred dollars a month to run my business. Shelby’s employer provides everything for him.

The self-employed are responsible for their own benefits

Many employers cover some portion of an employee’s health insurance and make contributions to their retirement plans. As the employer and the employee, the self-employed have to provide their own benefits.

This year, my health insurance premiums were $233.64, and because I’m on a high deductible plan, I maxed out my health savings account (HSA) contribution of $4,150. My business pays for both of these.

Shelby’s employer pays 100% of his health insurance premium and he does not qualify for an HSA or FSA because his policy is better than a high-deductible plan.

While his employer contributes to his 401(k), Shelby makes additional contributions that are deducted from his paycheck. My business makes SEP IRA contributions for me so we’re on the same level with retirement.

I’m building up my business’ reserves and emergency fund

Because my business experienced a dip for so long, I no longer have an emergency fund. This has led me to overdrawing my bank account and not being able to pay myself for weeks at a time.

I never want to go through that again, which is why I’m setting aside a large portion of my income to a buffer and emergency fund.

A buffer is an amount of cash you keep in your bank account to cover unexpected expenses or temporary dips in business. The buffer amount depends on your business’ income and expenses. Because my expenses are low, my goal is a buffer of $1,000.

An emergency fund is money that stays in your bank account unless you or your business faces a big emergency, such as a long-term illness or injury, or a prolonged dip in business. I’m aiming for a 12–18 month emergency fund of expenses and owner’s draws.

Why so much? Because if you need to tap into your emergency fund, it can take a long time to replenish it. And if another emergency comes up while you’re rebuilding your account, you could find yourself in a dire situation if that first emergency cleaned you out.

This is why I’ve gone years without an emergency fund: I depleted it in 2020 and haven’t earned enough to build it back up again.

Read: How I’d Build My Business’ Emergency Fund (If I Could Do It All Over Again)

So until I meet my buffer goal and reach a comfortable amount in my emergency fund, my owner’s draws will remain low.

It’s better to pay yourself a small, consistent amount and build an emergency fund than to drain your business bank account monthly.

Business income isn’t guaranteed

While I’m riding out the high of exceeding my husband’s engineering salary last month — and for the foreseeable future — I’m even more proud that I’ve made the decision to take home much less than he is. Because unlike employment income, business income isn’t guaranteed and we should never calculate our owner’s draws based on what we earn in a single month.

Instead, pay yourself below what your business is capable of during its busy season with the understanding that businesses experience ebbs and flows, feasts and famines.

And with an emergency fund to back you up, you’ll be far less likely to panic when the slow season strikes.

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